Cigars and cigarillos are perceived to be premium products by Thai consumers and as such are mainly only purchased by a niche group of wealthier locals and tourists. Sales of these products were hard hit by the outbreak of COVID-19 in Thailand for numerous reasons.
While sales of cigars and cigarillos struggled throughout most of 2020, the opposite was true for smoking tobacco which thrived. One of the most significant factors behind the dynamic performance of smoking tobacco was the economic impact of COVID-19 on the local economy, coupled with the high taxes on cigarettes.
Despite a difficult year, Corporación Habanos SA retained its overall leadership of cigars and cigarillos in 2020 due to its dominance of cigarillos with a wide range of brands including Cohiba Mini Cigarillos, Montecristo Mino Cigarillos and Romeo y Julieta Mini Cigarillos in addition to offering a range of premium cigars with strong brand equity under the Montecristo and Cohiba lines. However, it continued to lose retail volume share to leading cigars player J Cortes Cigars NV, with the latter offering leading brands Royal Class and High Class.
Fine cut tobacco received a huge boost from the impact of COVID-19, with many cigarette smokers making the switch to RYO in order to save money. As Thailand starts to roll out its COVID-19 vaccination programme it is hoped that it can move towards a period of normalisation in 2021, which should in turn allow the country to focus on bringing tourism back.
COVID-19 has taken a heavy toll on Thailand’s tourism industry, and it is unlikely that inbound arrivals will start to recover to pre-pandemic levels until at least 2022. With tourists making up a significant share of the consumer base for cigars and cigarillos the recovery of tourism in Thailand will likely be closely linked to the recovery of these products.
Cigars retained its positioning in Thailand as a premium product and remains the largest category in value terms within overall cigars, cigarillos and smoking tobacco, despite a difficult year in 2020. The target audience for cigars is an affluent niche for whom price rises stemming from higher taxes can be more easily absorbed, especially amongst avid collectors.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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