INDIA CIGAR AND CIGARILLOS MARKET ANALYSIS

India Cigar And Cigarillos Market Size and Trends

India cigar and cigarillos market is estimated to be valued at USD 3.0 Mn in 2024 and is expected to reach USD 4.2 Mn by 2031, exhibiting a compound annual growth rate (CAGR) of 4.9% from 2024 to 2031. The market has been witnessing steady growth over the past few years and this growth is anticipated to continue over the forecast period

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The market growth can be attributed to rising disposable incomes, increasing socialization habits among urban populations, and growing popularity of cigars as a symbol of luxury and affluence. Additionally, increasing youth attraction towards experimentation with different tobacco products and aggressive branding and promotion strategies by cigar producers are some other key factors responsible for the steady growth of this market in India.

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Insights, By Product - Perception as a Cheaper Alternative

In terms of product, the mass cigar segment is estimated to contribute the highest market share of 61.2% in 2024, owing to its wide appeal and affordable pricing. Mass cigars are preferred by budget conscious consumers and occasional smokers due to their low prices. Their easy availability across various distribution channels including small neighborhood stores has added to their popularity over the years. Moreover, mass cigars are perceived as a cheaper alternative to imported premium cigars and cigarettes further fueling their uptake. Ease of use without need for special accessories also works in favor of mass cigars. Overall, factors such as affordability, accessibility, variety in flavors continue to drive strong demand for mass cigars in India.

Insights by Flavor - Growing demand for tobacco flavored cigars

In terms of flavor, the tobacco/no flavor segment is estimated to contribute the highest market share of 52.3% in 2024 owing to perceived authenticity of experience. Tobacco flavored cigars are preferred by experienced and occasional cigar smokers who appreciate the traditional taste. Their niche, classic flavors closely mimic the original Cuban cigars which are considered a prestige product globally. Moreover, tobacco and unflavored cigars are believed to bring out the true essence and aromas of different tobacco varietals and blending. Additionally, their enduring popularity has made tobacco flavored cigars an anchor product available across all distribution points. Overall, the taste of tradition and authentic cigar experience continues attracting users to tobacco flavored cigars.

Insights by Distribution Channel - Driving Hypermarkets Lead in Distribution

In terms of distribution channel, the hypermarkets & supermarkets segment is estimated to contribute the highest market share of 35.3% in 2024, benefitting from their widespread presence and varied assortment. Their large format and consolidated products from across categories ease accessibility to cigars. Moreover, strong supply chain and private label offerings of hypermarkets ensure steady inventory levels. The convenience of one-stop-shop has made hypermarkets a desirable channel for flavored and premium cigars. Overall, hypermarkets have strengthened their dominance in cigar distribution by enhancing accessibility, shopping experience and private label presence.

Market Concentration and Competitive Landscape

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Top Strategies Followed by India Cigar and Cigarillos Market Players

• Established Players: Leading companies invest heavily in research and development to drive product innovation. Godfrey Phillips, for example, operates extensive R&D facilities that allow it to utilize global tobacco knowledge and develop customized blends. Additionally, strategic partnerships have helped major players expand their portfolios and distribution. Indian tobacco Company Limited (ITC) has leveraged its partnership with Philippines Tobacco to enter new international markets.
• Mid-Level Players: To compete against industry giants, mid-sized companies focus on delivering affordable yet high-quality options. Vazir Sultan Tobacco Company Limited Industries aims to be highly cost-effective through efficient processes and locally-sourced materials. Additionally, collaborations provide access to new resources that smaller player’s lack. Golden Tobacco has teamed with China Tobacco to boost production volumes and standards.
• Small-Scale Players: Niche specialization allows smaller local producers to succeed. For example, Corona Cigar focuses on unique hand-rolled craft cigars targeting aficionados. New age technologies also help level the playing field—Saath Cigar uses Blockchain to authenticate products and improve traceability. Partnerships within local community’s aid market access for artisanal brands.

Emerging Startups in the India Cigar and Cigarillos Market

• Innovative Technologies: Startups are embracing technologies like artificial intelligence. Smokeless, for instance, develops heated tobacco products that eliminate combustion risk using AI temperature control. Meanwhile, sensors from Fumotech allow real-time monitoring of storage conditions to ensure optimal quality. These innovations will transform tobacco consumption and supply chain management.
• Sustainable Solutions: Some startups prioritize eco-friendliness. Green Tobacco produces biodegradable paper from agricultural waste, reducing waste. AgroCigars cultivates tobacco without harmful chemicals through hydroponics and sustainable farming practices. Their contributions promote a greener industry overall.
• Market Contribution: Startups also fill gaps in niche sectors. TobaccoAFE caters to Africa's artisanal export market through quality certification programs. Meanwhile, Vapetrella's medically-backed vapor brand addresses health-conscious nicotine users.

Key Takeaways from Analyst

The India cigar and cigarillos market is primarily driven by the growing smoking population in the country. The increasing income levels and disposable incomes have made premium tobacco products more affordable. Moreover, rising social acceptance of smoking in public places is fueling the adoption of cigars and cigarillos among young adults. That said, stringent government regulations around tobacco product display, advertising and health warnings continue to restrain the market growth. Rising taxes on tobacco products also act as a growth deterrent.

However, the market sees opportunities from innovative product development focusing on new flavors and sizes to appeal to a wider customer segment. Launch of inexpensive machine-made and small cigars is expanding the consumer base. The increasing trend of cigar lounges and bars where people can smoke socially is propelling the product trial. The growing popularity of hand-rolled premium cigars among urban working professionals present new avenues.

Market Report Scope

Market Dynamics

Market Driver - Increasing disposable income and changing lifestyle of the Indian population

As the Indian economy continues to grow rapidly, disposable incomes have also increased substantially over the past decade. Many Indians now have more discretionary funds to spend on luxury items and experiences. The rising middle- and upper-class consumers in metropolitan cities and major towns want to explore new product categories and indulge in premium offerings. The cultural shift towards westernization has further popularized certain luxury goods and premium products in social circles.

Cigar consumption was traditionally seen as a luxury indulgence limited to wealthy segments. However, increasing exposure to global trends through foreign travels, media, and social media has made younger Indians more open to experimenting with new habits. Data released in September 2023, as per a report by the United Nations Population Fund (UNFPA), over 50% of India's population, or over 700 million people, currently resides in urban areas. This share is predicted to rise to over 60% by 2030. The continued urban migration and expansion of cities will continue to fuel economic opportunities and upward social mobility.

Market Challenge - High government taxes on cigars

One of the major challenges faced by the India cigar and cigarillos market is the high taxes imposed by the government on these tobacco products. The government of India levies a significant amount of excise duty and other taxes on cigars and cigarillos. This makes these products significantly costlier for the average consumer in India as compared to other tobacco products like cigarettes. The high prices due to taxes also encourage the growth of illicit and spurious cigar products in the market. The high tax structure restricts legal manufacturers and distributors from pricing cigars and cigarillos competitively. This protects the market share and profitability of low-priced cigarette brands. For instance, as per data released in June 2020 by the WHO, the average retail price of premium cigars in India is 3-4 times more than international markets due to the heavy taxes.

Market Opportunity - Product innovation and premiumization for market

One major opportunity available for the India cigar and cigarillos market is the potential for product innovation and premiumization. As the economy grows and disposable incomes increase, there is a rising section of consumers in India who are experimenting with and demanding premium tobacco products. This presents an opportunity for cigar makers to develop innovative product lines targeted at this segment. Companies can introduce craft cigars with unique blends, shapes and flavors. They can also launch premium hand-rolled and machine-rolled cigarillos at different price points. Such differentiated products will help command premium prices in the market. Further, according to government data Statista 2024, imports of premium cigars and cigarillos rose by over 15% from 2020 to 2022, indicating a sizable addressable market for premium offerings. If brands leverage their expertise to enter this segment with innovative, high-quality products, it will allow them to tap into the growing demand for luxury and novel experiences among urban Indians.

Market Segmentation

• By Product Insights (Revenue, USD, 2019 - 2031)
• • Mass Cigar
  • Premium Cigar
• By Flavor Insights (Revenue, USD, 2019 - 2031)
• • Tobacco / No Flavor
  • Flavored
  • Fruit
  • Mint
  • Chocolate
  • Others
• By Distribution Channel Insights (Revenue, USD, 2019 - 2031)
• • Hypermarkets & Supermarkets
  • Specialty Stores
  • Online
  • Others
• Key Players Insights
• • AJF Cigars
  • Boutique Blends Cigars
  • Fenn Thompson & Co.
  • Royal Cigar Works
  • Gurkha Cigar Group
  • Imperial Brands
  • Joya De Nicaragua, S.A.
  • Scandinavian Tobacco Group
  • Swedish Match AB
  • Swisher