Cigars, Cigarillos and Smoking Tobacco in Morocco

2021 DEVELOPMENTS

Cigars and pipe tobacco severely hit by closure of cafés and bars

Cigars, cigarillos and smoking tobacco posted severe declines for a second consecutive year in 2021 since the outbreak of the pandemic in Morocco. The decline was largely driven by the critical drop in demand for cigars, which, in Morocco, is still perceived as a luxury product, rather than being as essential as cigarettes.

Price hikes prompt consumers to switch to duty free sales

In 2021, cigars experienced further price increases as was the case across tobacco. Amid rising prices, most consumers preferred to purchase cigars from duty free shops when they could travel, where prices are 20% to 30% lower.

Strict prohibition of pipe tobacco both outdoors and indoors behind low sales

For the second consecutive year, smoking tobacco posted negative sales, mainly due to the closure of hotels, bars and cafés. Despite the reopening of such outlets, pipe tobacco remained banned at the end of the review period.

High prices of pipe tobacco encourage consumers to switch to illicit trade

There is a limited number of pipe tobacco products in Morocco, with brands such as Al Nakhla, Al Khayma, Mazaya and Al Arabi present in the economy segment, and Al Fakher in the premium segment. However, the prices remain unaffordable to mass consumers, and therefore a large number of Moroccans prefer to buy unpackaged pipe tobacco by weight in grams from tobacco specialists.

North Africa Tobacco dominates pipe tobacco with its well-established brands

While Société Marocaines des Tabacs dominates cigars, North Africa Tobacco holds the dominant retail volume share in smoking tobacco. Further to the acquisition of the Al Nakhla brand in 2014 by Japan Tobacco Inc (the sole brand present in Morocco then), this well-established brand became officially distributed by North Africa Tobacco.

PROSPECTS AND OPPORTUNITIES

Cigars set for sluggish growth due to weak economy

Cigars is expected to post a sluggish performance in retail volume terms over the forecast period, with the latter set to record a CAGR of -3% due to the persisting effects of the pandemic and the weak economy, which will continue to have a dire impact on household incomes. Moreover, the price sensitivity of many Moroccans and the relatively low-income levels of most consumers in the country will limit the growth potential of cigars, which is generally seen as a luxury product.

Smoking bans in HORECA will continue to limit sales of pipe tobacco

With the lingering impact of the pandemic and the surge of new virus variants, it is unlikely that restrictions will be further relaxed in the short-term period, with authorities continuing to ban smoking pipe tobacco in cafés and bars and also ban any social gatherings or events, especially as Moroccans like to smoke shisha in groups rather than individually. Declining disposable incomes will also force many consumers to turn to illicit or unpackaged pipe tobacco by weight, given the rising prices.

Société Marocaines des Tabacs and North Africa Tobacco will continue to dominate cigars and pipe tobacco, respectively

While Société Marocaines des Tabacs dominates cigars, North Africa Tobacco will maintain its monopoly of smoking tobacco. Société Marocaines des Tabacs is the exclusive distributor of Corporación Habanos SA in Morocco and distributes internationally-renowned cigars such as Cohiba, Montecristo, Partagás Lusitanias, and Romeo y Julieta Churchills.