Following the outbreak of the COVID-19 pandemic in Saudi Arabia, authorities imposed a ban on the serving of shisha and tobacco on cafés and bars in order to prevent the spread of COVID-19 in these locations. The ban was implemented by local authorities in several Saudi cities in 2020 including the capital Riyadh and remained in effect for the rest of 2020 due to the continued threat of COVID-19 spread through breath.
Saudi Customs and Excise controls have banned the importation of shisha, e-cigarettes and their accessories through shipping companies and individual websites. Only companies licensed by the Saudi Food and Drug Authority (the SFDA) are henceforth permitted to import such products in commercial quantities.
In 2020, Saudi authorities increased VAT in the Kingdom in order to offset the damage to the country’s economy caused by a decline in demand for fuel during the COVID-19 pandemic. With VAT rising from 5% to 15%, cigars and cigarillos, which were already a relatively niche product area, became more expensive and therefore less popular with price sensitive consumers.
Over the forecast period, retail volume sale of cigars and cigarillos will continue to decline as the category becomes increasingly niche, for a very select audience. Sales of products in this category are increasingly restricted to consumers looking for a specific experience and high quality tobacco products or collectors looking to invest in the purchase of premium cigars and cigarillos.
Over the forecast period, smoking tobacco is expected to demonstrate a recovery in retail volume terms as the COVID-19 pandemic comes to an end and restrictions imposed to curb the spread of the virus are lifted. When the vaccination programme is well underway, authorities are expected to life the ban on the sale of shisha and smoking tobacco in cafés and restaurants, which will see business from social smokers return, stimulating an increase in volume sales.
Tobacco specialists is expected to remain the dominant distribution channel for cigars, cigarillos and smoking tobacco. The channel benefits from selling both tobacco products and the accessories necessary for their use.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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