In 2020, cigars and cigarillos turned to retail volume and current value decline for the first time in many years. COVID-19 resulted in the government introducing a lockdown, which led to the temporary closure of tobacco specialists during the MCO, which is the main distribution channel for these products.
Within smoking tobacco, pipe tobacco also saw a decline in 2020, although this was from a low base, and it remained a niche category. However, in an opposite trend, fine cut tobacco maintained retail volume growth, although this was at a lower level then seen in previous years of the review period, as some disruption to distribution was seen.
Company shares remained fairly stable across both cigars and cigarillos and smoking tobacco in 2020. With a myriad of product offerings in both cigars and cigarillos, Swisher International Group remained the leading player in cigars and cigarillos in volume terms in 2020, although whilst it led cigarillos, it was second to The Pacific Cigar Co in cigars.
Cigars and cigarillos is set to see a return to slow growth in 2021, although COVID-19 is still expected to limit the rate of increase in this year, which will be lower than in most years of the review period. The virus saw a resurgence in the country in the first half of the year, which led to the reintroduction of tougher restrictions.
Several upscale cigar lounges opened in prime high-traffic areas such as shopping centres towards the end of the review period, such as the Mayan Cigar Lounge and Cigar Malaysia. Although these had to close during lockdown in 2020 and the beginning of 2021, they are likely to contribute to the return to growth for cigars in the forecast period.
Fine cut tobacco is set to maintain steady retail volume and current value growth rates throughout the forecast period as consumers get to know the variety of flavours available, as well as its low price and rising accessibility nationwide. With many consumers remaining price-conscious as a result of the economic impact of COVID-19, the growth of the category is expected to be strongest at the beginning of the forecast period.
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