It was a very complex year for cigars and cigarillos, due to the emergence of the COVID-19 pandemic. This prompted the closure of borders to prevent the spread of the virus, which led to a reduction in tobacco smuggling.
The economic impact of COVID-19 contributed to higher volume growth for smoking tobacco in 2020, particularly fine cut tobacco, as many cigarette smokers looked for cheaper products, as well as alternatives perceived as less harmful. Due to the high taxes on cigarettes, some consumers switched to smoking tobacco as a cheaper option, rather than turning to illicit trade.
La Republicana maintained its commanding lead in cigars and cigarillos in volume terms in 2020. The company imports and distributes a number of globally renowned brands in Uruguay, including Henri Wintermans, Swisher Sweets and King Edward.
Following the back to basics trend, and to reduce the cost of smoking at what is expected to continue to be a difficult time for households financially in the early forecast period, fine cut tobacco is projected to record a solid retail volume CAGR over 2020-2025. Growth will be driven by the increasing development of both local and imported brands, the rise of premium offerings from Europe and the US, and the upbeat growth of flavoured smoking tobacco.
Cigars and cigarillos is forecast to recover strongly from 2021, seeing a strong retail volume CAGR in the forecast period overall, driven by the reopening of on-trade outlets in the early forecast period and a better economic scenario after the COVID-19 crisis. A return to the pre-pandemic level of sales, seen in 2019, is expected in 2022.
Pipe tobacco targets the small segment of high-income consumers, and is projected to remain a small and rather stable category. However, there is potential for a switch in consumption from discount brands from Argentina to premium European options as economic recovery is seen after the COVID-19 pandemic comes under control through vaccination.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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