Cigars, Cigarillos and Smoking Tobacco in the Philippines

2021 DEVELOPMENTS

Cigars and cigarillos reports growth

While other tobacco categories saw volumes plummet in 2021, cigars and cigarillos reported growth, with cigars growing faster than cigarillos. Despite relying on a niche market, the category benefited from affluent cigar smokers continuing to make cigars and cigarillos part of their lifestyles in the midst of the pandemic.

E-commerce becomes increasingly important

With cigar stores and tobacco specialists not operating optimally, e-commerce became more important to cigars and cigarillos during the COVID-19 crisis. Key companies such as Tabacalera and Tabaqueria have developed their online websites to be an important sales channel, but have also partnered with other tobacco specialists and alcoholic drinks specialist retailers selling online.

Established players continue to build around luxury lifestyle

There is a strong history of cigars and cigarillos in the Philippines and established players in the category use their social media presence to continue to ride on the luxury image of such products. For example, market leader, Tabacalera uses social media to communicate how consumers in private getaways smoke its brands, such as Don Juan Urquijo, in order to promote an upmarket image and appeal to the category’s affluent core consumer base.

PROSPECTS AND OPPORTUNITIES

Positive outlook for cigars and cigarillos

While there is a pending “vape bill” that may take effect over the forecast period, the relatively niche and affluent consumers of cigars and cigarillos are less likely to be affected by the urge to switch to e-vapour products or heated tobacco than consumers in categories such as cigarettes. Nonetheless, it is important for established players to continue to communicate a message about the distinctive images and lifestyles associated with their products in order to thrive over the forecast period.

E-commerce will remain relevant post-pandemic

While there has been an easing of COVID-19 related restrictions on store-based retailing, e-commerce is expected to continue to increase its relevance in cigars and cigarillos during the forecast period because consumers have come to appreciate the opportunity to achieve convenience when shopping. 2021 highlighted the opportunities for cigars and cigarillos players to build partnerships beyond tobacco specialists, which will also benefit consumers in terms of product variety and access over the forecast period.

Collaborations with whisky makers may be key to sustainability of the category

As cigars and cigarillos players are seeking different sources of growth, practices such as whisky pairing are likely to become increasingly prominent in their strategies during the forecast period. Traditionally, there has been an interest in whisky and cigar bars such as 1824 Whisky and Cigar Bar, The Macallan Whisky Bar, and Mandalay to name a few.