Cigars and cigarillos continued to experience an erosion of share within overall tobacco in the United Arab Emirates in 2021, due to price increases in line with rising inflation as well as the introduction of VAT. With a higher youth population that is shifting towards new-generation products that emerged at the end of the review period, there is limited opportunity to attract a new consumer base for cigars and cigarillos, and therefore sales are mostly restricted to a niche and affluent portion of the population.
Pipe tobacco, which experienced a significant decline in demand the previous year, presented a more subdued drop in demand in 2021 with a greater return to normalisation and full working hours of shisha bars. COVID-19 heightened hygiene practices such as disposable shisha hose tips continue to be given to consumers.
The United Arab Emirates accounts for a major proportion of cigar consumption amongst the gulf countries. Parallel imports and illicit cigars were increasingly evident in the market towards the end of the review period due to high price positioning of the category.
Over the forecast period, shisha consumption is expected to post a partial recovery from the decline in volume sales caused by the COVID-19 pandemic. Pipe tobacco is projected to register improving demand from 2022 onwards as the vaccination programme and the end of COVID-19 restrictions will stimulate sales.
Cigars and cigarillos are increasingly becoming niche products for a very select audience, looking for a specific experience and high-quality tobacco. Due a declining smoking population, especially amongst older demographics, and the launch of new-generation tobacco products in the United Arab Emirates, it is likely that demand for cigars and cigarillos will remain subdued and below pre-pandemic levels over the forecast period.
As online sales in the country continue to grow, it is highly likely that e-commerce will penetrate the category as well with more authorised platforms providing the service of buying products online with the option of home delivery and/or click and collect. It is expected however, that tobacco specialists will remain the primary channel for sales of cigars, cigarillos and smoking tobacco.
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Cigars, Cigarillos and Smoking Tobacco
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