Cigar market polarises under lockdown

smoking a cigar

The cigar category has performed remarkably well during the pandemic with the best performing segments at each end of the spectrum: value for money and premium.

It’s a tough job making sense of market data these days with the last six or seven months throwing the world into turmoil. Analysing what the basic market research data is telling us and why it’s happening is no easy task and the cigar category is no different.

At top line level, the category has performed remarkably well. The total cigar category is down across the UK by about 3.5% by volume and just 0.2% by value. Compare that with just four and five years and the market was in double digit decline. In Scotland the picture is even rosier with sales volumes down just 3% and value up by 2.1%.

What’s interesting to note, however, is that sales in Scotland of medium and large cigars have actually risen – and by a chunky 6.5% in volume and 10.2% in value. Miniature cigars still dominate the market with 71% volume share, but the growth of sales in larger cigars is worth noting.

Alastair Williams, UK Country Director at category captains Scandinavian Tobacco Group accepts that interpreting the data and understanding why the shifts are happening is complex, but suggests it’s possible simply down to ‘occasions’.

“What we’re seeing under lockdown is more people spending more time at home,” he explains. “Medium and large cigars obviously require a little longer to enjoy so it could simply be that more consumers have more occasions available to them to enjoy a larger cigar. Plus, the great weather all summer undoubtedly helped.”

Scottish Cigar Market
The Scottish Cigar Market

At least some of the growth in the larger cigar market has been driven by a special limited edition introduced in August by STG. The Union Jack-bedecked Henri Wintermans Half Corona Limited Edition saw sales spike hugely and annual retail sales value in Scotland hit a chunky £1.9m.

But it’s not just at the premium end that the category is growing. The only top 10 cigar brand in significant growth is Moments Blue, STG’s leading value for money offering. Sales are up 1.7% by volume in Scotland.

“It appears that there is a bit of polarisation,” says Williams. “The areas we’re seeing the biggest growth are in the premium end and the value for money end and that’s something that retailers should be aware of when they’re checking their range.”

STG is by far the largest player in the category both across the UK (54.9% share) and especially in Scotland (60.4%) share and the company has had a positive 2020 so far. Highlights include above expectations yearly performance, the launch of Signature Dual Filter cigarillo, the completion of the acquisition of the Royal Agio business and the signing of a new distribution deal with Mac Baren pipe tobacco.

All of these moves are set to further strengthen STG’s hold on the category and is potentially great news for local retailers. With the top three brands in Scotland and six of the top 10, STG’s portfolio now accounts for more than 35% of the total Scottish market.

Cigars remains a small element of the overall tobacco category but it’s an element that’s proving very resilient and the longer lockdown continues the more likely that the category will continue to solidify. So when is the last time you reviewed your range, and is it in line with the trends prevailing under lockdown?

Top 10 brands in Scotland
The top 10 brands in Scotland