With cigars remaining the only relevant product type within cigars, cigarillos and smoking tobacco, the category remained a niche within overall tobacco in Pakistan at the end of the review period. The category continues to target a limited affluent consumer group, which was therefore financially unaffected by the pandemic in 2020, with demand for cigars remaining steady.
The distribution of cigars remains limited to the major cities of Pakistan, with the majority of consumers located in Karachi, Lahore and Islamabad. Tobacco specialists continue to account for the vast majority of sales of cigars in Pakistan with these stores providing smoking rooms (outside of lockdown) as well as having trained sales staff who can advise about the various options on offer.
Imperial Tobacco Co Ltd retained its dominant position in cigars in 2020 due to the popularity of its mid-priced Phillies brand. Although cigars are generally only purchased by higher income consumers, the Phillies brand is more accessible to mid-income consumers than some other brands which supports its continuing popularity.
Further growth in the country’s mid-to-high income groups is expected over the forecast period beyond the pandemic. In line with an improving local economy once the threat of the pandemic wanes, cigars is also set to experience further growth over the forecast period.
Further price increases will ensure that value growth (at constant 2020 prices) will outperform volume growth over the forecast period, although this will not be a particularly discouraging factor for the most affluent of cigar smokers. However, cigars are unlikely to be negatively impacted by any tax hikes that will be introduced to cigarettes over the forecast period.
Duty paid packet marks and tax stamps are not required on cigars in Pakistan and are not expected to be enforced over the forecast period. As cigars are entirely imported into the country, they do not face such strong penetration of illicit trade faced by cigarettes and so duty stamps are not a priority for cigars as they are for cigarettes.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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