Fine cut tobacco enjoyed a strong rebound in demand in 2021, in large part due to its associated value proposition along with the market environment caused by pandemic-related restrictions and impact on income levels. Fine cut tobacco brands, such as Colts or Golden Virginia, appeal to consumers as they offer large pack sizes, and therefore greater volumes of tobacco compared to cigarettes at the same price-per-volume.
Despite declines experienced by cigarillos over the review period, demand significantly improved in 2021, in large part due to flavour offerings. One example is leader Swisher BlackStone, which offers popular flavour variants such as vanilla and cherry.
Cigars witnessed a recovery in 2021 in terms of demand, following a challenging period at the onset of the pandemic and subsequent tobacco bans in early 2020. Much of this stems from the maturity of cigars, which resulted in a stabilisation of sales.
Due to the perception among South Africans of cigars and their origins, international brands including Cohiba and Romeo y Julieta (locally distributed by The Cigar Co Pty Ltd for Corporación Habanos SA), are expected to retain their strength over the forecast period. These brands have been able to establish a strong presence over the years and have become a staple in cigars, with these two brands holding a combined 32% retail volume share in 2021.
Despite an upturn in demand in 2021, retail volume sales of pipe tobacco are expected to return to decline over the forecast period. This will be connected to two key factors.
Due to rising global inflation, products across the category are expected to see increased prices, relative to the review period. This will include an increase in South African inflation, in addition to the generally higher local inflation rate compared to developed markets.
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Cigars, Cigarillos and Smoking Tobacco
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