The global cigar and cigarillos market size is expected to reach USD 21.02 billion by 2025, according to a new report by Grand View Research, Inc. It is anticipated to register a CAGR of 3.1% during the forecast period. Implementation of heavy taxes and increasing price of conventional cigarettes drive the product demand. Increasing number of consumers prefer cigars as they have better reputation and lower price, which is projected to positively influence growth.
The global market is getting more and more diversified with the availability of products in all the range and flavors. The top most competitors are Nicaragua, the Dominican Republic, Honduras, and Brazil. In recent days various verities are launch by the manufactures to gain greater market share. Many regional and domestic players are entering into the market with a unique and innovative products to gain customer base. Recently, in Europe, Switzerland entered into cigar manufacturing and Swiss brand “Davidoff” which is gaining popularity as a brand with unique quality of the product. Moreover, Nicaragua innovated organic cigar with a brand name “Plasencia”, which is expected to gain popularity in Asia, especially in the China.
The mass segment held major market share of global market owing to the growing popularity of cigars and cigarillos among the young consumers. Moreover, growing number of female consumers in the developed countries is expected to fuel the demand for mass products over the forecast period. However, the premium segment is expected to expand at the highest CAGR over the next seven years. Presence of luxury hotels and bars with cigar lounges, in developed countries, such U.S., U.K., and China have made comeback, thus, the consumption has increased drastically.
The flavored product segment is expected to expand at a CAGR of 3.2% over the forecast period. Many new consumers prefer flavored cigars as the taste is perceived to be better than the natural tobacco flavored products. Moreover, many consumers are migrating from other tobacco products including conventional cigarette to cigar and cigarillos. In addition, many companies have launched various flavored product to attract consumers, fueling the demand.
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The global cigar and cigarillos market size was valued at USD 16.99 billion in 2018. It is expected to expand at a CAGR of 3.1% during the forecast period. The global market is expected to witness substantial growth owing to the increasing number of luxury hotels with cigar lounges. Following the worldwide ban on smoking in public places, such lounges and bars are making appearance in luxury hotels and bars. For instance, DUKES Hotel of London welcome its stogie-loving visitors in the cognac and cigar garden. The secluded courtyard located behind the hotel offers a list of cognacs to accompany the Cuban cigar.
Further key findings from the report suggest:
In terms of revenue, the premium product segment is projected to ascend at a CAGR of 3.3% over the forecast years
The mass product segment led the global market with an overall revenue share of over 82.3% in 2018
Flavored segment was valued at USD 4.93 billion in 2018, is projected to exhibit a high CAGR in the next few years
North America led the global cigar and cigarillos market in 2018, with 57.0% of revenue share and is projected to continue leading over the forecast period
Growing number of young consumers including men and women is further expected to propel the growth
The market is highly competitive in nature. Major companies include Altria Group, Inc.; Habanos S.A.; Scandinavian Tobacco Group A/S; Gurkha Cigars; Swisher International, Inc.; Agio Cigars; Swedish Match AB; OETTINGER DAVIDOFF AG; Drew Estate; and Trendsettah USA, Inc.
Various manufacturers are concentrating on new product launches, capacity expansions, and technological innovations to cater to the existing and future demand patterns from upcoming product segments.
Introduction of various flavors including wine, tea, chocolate, and vanilla to mask harsh taste of tobacco is fueling the demand among the young consumers. Flavored product is the most popular variety among the premium cigars. The flavors such as sweetened tobacco product like swisher sweet and white owl are leading the market for generations, while flavored product like Tatiana, Acid, and Java have contributed in increase in demand for flavored product in last 15 years. In addition to this, companies operating in the tobacco product industry are conducting R&D activities in order to offer better tobacco quality and innovative flavors to compete in the market.
China is one of the prominent markets for premium cigars and is expected to become largest markets in the upcoming years. Traditionally, cigar was considered as luxury tobacco product, which is purchased by rich, middle aged consumers. However, increasing penetration of low cost product coupled with growing number of young billionaires in China is expected to promote the usage on a domestic level. Moreover, Cuban cigar manufacturers are focusing on increasing their market reach through the strategic collaboration.
For instance, in 2017, Habanos S.A. signed an agreement with the China National Tobacco Corporation to increase import of premium cigar. The company is focusing on training their sales force along with increasing spending for the expansion of their distribution networks. However, Habanos S.A. is facing challenge in increasing awareness related to the various brands such as Montecristo, Romeo, and Julieta, on account of increased visibility of Cohiba, one of the island’s leading brand popular among Chinese consumers.
Demand for Cuban cigar is expected to witness significant growth in India on account of increasing concentration of cigar clubs in cities including New Delhi, Bengaluru, Mumbai, and Kolkata. The demand is attributed to growing brand awareness among the neo rich coupled with increased influence of western culture among young consumers. However, the lack of adequate choice and limited marketing due of stringent government regulations on advertising of tobacco-related products are expected to hinder the growth in near future.
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Mass cigar held the largest market share of 82.3% in 2018. Compared to premium, mass products are likely to be most preferred by young consumers. Mass category products are machine made and are less expensive compared to premium category products, owing to which, young consumer, mostly high school students opt for mass category products. In addition, mass category products are available in various flavors such as mint, chocolate, menthol, and vanilla which has led to rise in consumption.
Premium cigar segment is expected to witness the fastest growth over the forecast period on account of growing demand from luxury hotels and bars. Furthermore, premium products are handmade and are witnessing significant demand from developed markets such as U.S., U.K., and China. Growing popularity of unique taste and favor is positively influencing the demand for this category since the past few years. Moreover, online stores are witnessing strong demand for premium category which is expected to drive the market during the forecast period.
Grand View Research has segmented the global cigar and cigarillos market on the basis of product, flavor, and region:
Cigar & Cigarillos Product Outlook (Revenue, USD Million, 2015 - 2025)
Mass Cigar
Premium Cigar
Cigar & Cigarillos Flavor Outlook (Revenue, USD Million, 2015 - 2025)
Tobacco/No Flavor
Flavored
In 2018, tobacco/no flavor segment led the market in terms of revenue share and is expected to maintain its dominant position over the forecast period. The segment was valued at USD 12.05 billion in 2018 and is expected to expand at a CAGR of 3.0% from 2019 to 2025. Most of NORDIC population preferred no flavor tobacco products, followed by chocolate and vanilla flavored tobacco products.
Flavored products are expected to witness significant growth over the forecast period owing to the rising popularity of flavored products among young consumers. Moreover increasing number of female consumers is expected to boost the scope of demand for flavored products over the forecast period. Among the various flavors, fruit-based flavors are the most preferred, but sale of non-descriptive flavor such as wine, tea, and Jazz are expected to witness substantial growth in near future.
About Grand View Research
Grand View Research, Inc. is a U.S. based market research and consulting company, registered in the State of California and headquartered in San Francisco. The company provides syndicated research reports, customized research reports, and consulting services. To help clients make informed business decisions, we offer market intelligence studies ensuring relevant and fact-based research across a range of industries, from technology to chemicals, materials and healthcare.
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