India Cigar And Cigarillos Market, By Product (Mass Cigar and Premium Cigar), By Flavor (Tobacco/No Flavor, and Flavored), By Distribution Channel (Hypermarkets & Supermarkets, Specialty Stores, Online, and Others)

Published In : Feb 2025

Code : CMI4813

Pages :80

Formats :

Excel and PDF

Industry : Consumer Goods

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.