CIGARS AND CIGARILLOS MARKET ANALYSIS

Cigars And Cigarillos Market Size and Trends

Cigars and cigarillos market is estimated to be valued at USD 31.33 Bn in 2024 and is expected to reach USD 40.23 Bn by 2031, exhibiting at a compound annual growth rate (CAGR) of 3.6% from 2024 to 2031. Cigars and cigarillos sector has been expanding modestly over the past few years driven by an increased demand among young adult consumer groups who see smoking cigars and cigarillos as a leisure activity.

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The demand for premium and hand-rolled cigars in particular has increased its popularity as a way for consumers to enjoy the smoking experience. New product launches catering to evolving consumer preferences along with the social status associated with certain cigars brands are expected to continue spurring the market growth through 2031.

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Insights By Product- Increasing Demand for Affordable Products Fuels Growth in the Mass Cigars Segment

In terms of product, mass cigars segment is estimated to contribute the highest market share of 61.2% in 2024, due to growing demand for affordable yet enjoyable smoking experiences. Mass cigars offer a value alternative to premium cigars, appealing widely to both casual and committed smokers. Their low prices make them readily accessible to new consumers looking to experiment with different tobacco flavors or occasional smokers who enjoy cigars socially.

Insights By Flavor- Tobacco/no flavor Continues to Maintain Dominance

In terms of flavor, tobacco/no flavor segment is estimated to contribute the highest market share of 52.3% in 2024, due to enduring demand for traditional flavor profiles. Dedicated cigars smokers reliably purchase high-quality Connecticut shade, Cameroon or maduro wrapped options to savor tobaccos’ rich, nuanced notes according to each brand or blend.

Insights By Distribution Channel- Expanding Exposure Drives Hypermarkets & Supermarkets Segment Growth

In terms of distribution channel, hypermarkets & supermarkets segment is estimated to contribute the highest market share of 48.3% in 2024. This is due to strategically expanding consumers’ discovery opportunities. Collaborating with top manufacturers, these source in-demand national brands as well as store-exclusive quantities. Hypermarkets maximize impulse buys through attractive shelving, tastings and staff recommendations designed to welcome newcomers.

Regional Insights

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Dominating Region- North America

North America is expected to dominate the cigars and cigarillos market with an estimated market share of 59.3% in 2024, due to strong consumer demand and preferences. Countries such as the U.S. have a large consumer base that enjoys cigars smoking as a cultural pastime.

Fastest-Growing Region- Europe

The Europe region exhibits the fastest growth due to factors such as rising disposable incomes, urbanization, and expanding middle class population in countries like the U.K. and Germany. Local manufacturers are focusing on this promising consumer segment.

Cigars and Cigarillos Market Outlook for Key Countries

U.S. Cigars and Cigarillos Market Growth Driven by Premium and Flavored Product Demand

The U.S. market is dominated by iconic brands that continue to invest in new products and technologies to engage consumers. The U.S. remains one of the largest markets for cigars and cigarillos. The market is expected to grow due to the increasing popularity of premium and flavored cigars, particularly among younger consumers.

U.K. Cigars and Cigarillos Market: Resilience of Premium Cigars Amidst Regulatory and Taxation Challenges

In the U.K., the market is facing challenges due to increasing tobacco taxation and stringent regulations regarding advertising and packaging. Despite these challenges, premium cigars have shown resilience, especially among affluent consumers. The market for cigars and cigarillos is also growing, driven by a preference for lower-cost alternatives to traditional cigars.

Germany's Thriving Cigars and Cigarillos Market: Balanced Growth in Premium and Budget Segments

Germany has the largest cigars markets in Europe, with a strong tradition of cigars smoking. The country has a diverse market, with both premium and budget segments flourishing. The cigars and cigarillos seems appealing to younger consumers seeking convenient smoking options.

Canada’s Market: Rising Demand for Premium Cigars Despite Regulatory Restrictions

Canada’s market is marked by a growing interest in premium cigars. This growth is supported by an increasing number of cigars lounges and social clubs where consumers can enjoy their cigars ions are stringent, and there are restrictions on flavored tobacco products. However, consumers continue to seek out high-quality options, leading to a steady demand for premium cigars and cigarillos.

Market Concentration and Competitive Landscape

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Top Strategies Followed by Cigars and Cigarillos Market Players

• Established Players- Leading companies in the cigars and cigarillos market extensively focus on research and development to innovate new products. British American Tobacco, one of the top players, invests over US$ 600 million annually in R&D. This allows it to develop varied product ranges catering to changing consumer preferences.
• Mid-Level Players- Medium sized players often target the highly price-sensitive segment through affordable yet good quality products. For example, Swisher International aims to make cigars accessible to all through its economical little cigars and cigarillos.
• Small-Scale Players- New entrants tend to develop submarkets by addressing the requirements of specific buyer groups ignored by larger players. For instance, Nat Sherman specializes in premium hand-rolled cigars appealing to connoisseurs. J.C. Newman Cigars Company produces unique machine-made cigars targeting nostalgia seekers.

Emerging Startups in the Industry

The cigars and cigarillos sector has seen a surge in emerging startups, reflecting a growing interest in premium tobacco products. These new companies are focusing on unique blends, artisanal production methods, and sustainable sourcing to differentiate themselves in a competitive landscape. Many startups are also leveraging digital platforms to reach a wider audience, offering subscription services and personalized experiences for consumers.

There is an increasing emphasis on flavor innovation, with options ranging from traditional tobacco to infused varieties that appeal to younger demographics. Startups are also prioritizing eco-friendly practices, such as using organic tobacco and biodegradable packaging, aligning with the global trend towards sustainability.

Cigars And Cigarillos Industry News

• In July 2024, Scandinavian Tobacco Group (STG) acquired Mac Baren Tobacco Company. The transaction was expected to be financed by debt and cash at hand. Mac Baren portfolio includes brands including Mac Baren, Holger Danske, Amphora, Choice, Amsterdamer, and Opal.
• In March 2024, Oliva announced the opening of a new cigars lounge in Germany. The cigars shop named Whisky & Cigars Salon, now under its roof, has an Oliva-branded smoking lounge.

Key Takeaways from Analyst

• The cigars and cigarillos sector faces strong growth opportunities globally over the next five years. Latin America presents the largest potential, with countries like Brazil emerging as dominant consumers. Meanwhile, Asia Pacific is expected to see the fastest gains led by developing nations.
• Key drivers include rising discretionary spending power in emerging economies and social acceptability of cigars smoking in nightlife and social settings. Premium hand-rolled cigars are gaining popularity among young urban professionals as a luxury indulgence. Advertising and branding play a big role in shaping new demand.
• However, stringent regulations pose a restraint. Tax hikes and anti-tobacco policies in Europe and North America aim to curb usage. This may divert cross-border trade towards less regulated regions. Nonetheless, the affordable mass segment remains relatively protected being consumed primarily by older audiences.

Market Report Scope

Market Dynamics

Market Driver- Growing popularity of premium cigars

Growing popularity of premium cigars has been driving the cigars and cigarillos industry growth. According to a 2021 study by the National Cancer Institute, premium cigars consumption in the U.S. grew by 5% while cigarette smoking declined by 13% during 2015-2019. The WHO Report on the Global Tobacco Epidemic 2021 also found that cigars consumption is rising faster than cigarette use in many high- and middle-income countries as more people perceive cigars to be less harmful.

Market Challenge - Health concerns and public awareness

Cigars and cigarillos market growth can be hampered due to significant health concerns and rising public awareness challenges. Cigars contain many of the same toxic and carcinogenic chemicals as cigarettes, placing regular cigars smokers at high risk of various cancers, respiratory illnesses, and heart disease. For instance, in 2022, as per the report published by the U.S. Centers for Disease Control and Prevention, cigars smoking causes almost 9 out of 10 cancers of the oral cavity and lung.

Market Opportunity- Expansion opportunities in emerging markets

Cigars and cigarillos market witness expansion opportunities in emerging markets across Asia, Latin America, Eastern Europe, Middle East and Africa. While traditional cigars markets are primarily documented by the World Health Organization in their 2022 Global Tobacco Report, countries such as China and India also boast a rich history of local hand-rolled cigars traditions that have been practiced for centuries.

Market Segmentation

•  Product Insights (Revenue, USD Bn, 2019 - 2031)
• • Mass Cigar
  • Premium Cigar
•  Flavor Insights (Revenue, USD Bn, 2019 - 2031)
• • Tobacco / No Flavor
  • Flavored
•  Distribution Channel Insights (Revenue, USD Bn, 2019 - 2031)
• • Hypermarkets & Supermarkets
  • Specialty Stores
  • Online
  • Others
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East
    • GCC Countries
    • Israel
    • Rest of Middle East
  • Africa
    • South Africa
    • North Africa
    • Central Africa
• Key Players Insights
  • Altria Group Inc.
  • Habanos S.A.
  • Scandinavian Tobacco Group
  • Grukha Cigars
  • Swisher International Inc.
  • Agio Cigars
  • Swedish Match AB
  • OETTINGER DAVIDOFF AG
  • Drew Estate
  • Imperial Brands PLC