Sales of cigars and cigarillos plummeted in 2020 as COVID-19 spread through the Philippines. Notably, cigars and cigarillos’ main distribution channel, tobacco specialists, had to abide by limited operating hours between March and May 2020 because of the nationwide lockdown.
While cigars and cigarillos are considered premium products and are perceived as affordable only by higher-income consumers, the economic fallout of the pandemic still limited demand from high-income consumers in 2020. Indeed, the excise tax on cigars and cigarillos was already high pre-pandemic, at PHP6.
There was no notable new product development seen in cigars and cigarillos in 2020. In 2020, domestic player Tabacalera continued to lead retail volume sales of cigars and cigarillos, supported by a portfolio comprised of brands positioned at different price points.
In 2021, cigars and cigarillos are each set to record strong positive current value and retail volume growth. Once lockdown restrictions ease and society returns to some normality, the normalisation in the retail space of cigars and cigarillos will support recovery.
Since cigars and cigarillos still have a lack of visibility in the country, there will be many opportunities to raise awareness in the forecast period. Indeed, leading players Tabacalera and Tabaqueria de Filipinas Inc will likely continue looking into opportunities to encourage new consumers to experience their brands.
The growth of cigars and cigarillos in the forecast period may struggle due to ongoing economic concerns and consumer price sensitivity. This could lead to a down trading within each category and possibly from cigars to cigarillos.
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