Cigarillo is a type of cigar that is wrapped in tobacco leaves or tobacco-based paper and is smaller in size than regular cigar but larger than cigarettes. Cigars are popular among young smokers and are associated with a higher risk of oral and esophageal cancer. Cigars are also available in different flavors and available different shapes and sizes. Cigars are made up of three different components, the filler, and a wrapper leaf and the binder leaf which holds the filler together. Cigar tobacco is primarily grown in substantial quantities especially in Central America and the islands of the Caribbean.
The global cigars & cigarillos market was estimated to account for US$ 19.4 billion in terms of revenue in 2018 and is predicted to grow at a CAGR of 3.0% during the forecast period (2019 to 2027).
The growing launch of flavored cigars & cigarillos is gaining traction in the market, which is projected to propel the market growth of cigar and cigarillo. For instance, in April 2015, Innovative lifestyle brands manufacturer, Trendsettah USA Inc., has introduced its newest product, Extendo. Extendos are extended cigarillos and 8.5 inch long, -- double the length of a standard 4.25 inch cigarillo. This latest innovation further establishes Trendsettah as an industry leader and a growing competitor in the tobacco market.
Increasing imports of premium cigar product especially in the U.S. country in order to meet the rising demand for a cigar is expected to propel the market growth. According to the Cigar Association of America, in 2017, nearly 330 million premium cigars were shipped to the U.S by Nicaragua, which enjoys its second year as the largest supplier of premium cigars to the U.S. Premium cigar imports were up 2.4% over 2016, which amounts to nearly 8 million more premium cigars. This is the third year in a row imports into the U.S. have grown, increasing steadily since 2015.
Strict government regulation to control and prevent smoking among consumers to a certain extent is expected to restrain the market growth over the forecast period. According to the Coherent Market Insights, the Food and Drug Administration has banned flavored cigarettes, except for mint and menthol, and are planning to ban ‘kid-attracting’ flavored cigars & cigarillos. These factors are projected to hamper market growth in the near future.
In 2018, Fruit/candy dominated the flavor based segment in the global cigars & cigarillos market and was estimated to account for 39.2% of market share in terms of volume, followed by mint/menthol and chocolate, respectively.
Increasing focus of manufacturers on expanding product portfolio and production capacity is a major trend that is gaining traction in the market and this factor is expected to propel the market growth over the forecast period. For instance, in March 2019, Oliva Cigar Co. has expanded the production of its lighter-hued cigars, such as Oliva Connecticut Reserve. Moreover, Oliva also opened a new factory for making cigar boxes. All of these moves will result in the company increasing its cigar making capabilities by 40%, giving it the potential to roll some 30 million cigars annually.
Growing growth strategy by major players for promoting the cigar product is gaining popularity in the market, which is expected to propel the market growth over the forecast period. For instance, in March 2019, Royal Agio Cigars has partnered with Dubai Duty-Free for the promotion of limited-edition cigars. The promotion resulted in a 40% sales upswing for the premium Balmoral Añejo XO cigar range. Hence, rising adoption of such a growth strategy by players is expected to foster market growth.
The revised directive, approved by the European Parliament on 26 February 2014, strengthens the rules on how tobacco products are manufactured, produced, and presented in the European Union. Prohibiting characterizing flavors in cigarettes and RYO tobacco; menthol will be banned after a phase-out period of four years; other tobacco products, such as cigars, cigarillos, smokeless products, and snus are exempted from the ban on characterizing flavors.
Key players active in the global cigars & cigarillos market are British American Tobacco, Imperial Brands, Plc., Altadis S.A., Habanos S.A., Drew Estate LLC, Swisher International, Inc., Oettinger Davidoff AG., Swedish Match AB, and Trendsettah USA, Inc.
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