One of the most interesting developments in the cigar category over the last year has been a spike in UK sales of larger cigars, a spike not replicated in Scotland – so are retailers missing a trick?
When most local retailers contemplate the cigar category, their first thought is probably around miniature cigars. And, to be fair, the category has been dominated for a very long time now by miniatures – hardly a surprise since they account for over 70% of cigar volumes [IRI, Mar 2021] – but this train of thought may lead them to miss a growing opportunity: larger cigars.
“Henri Wintermans Half Corona, for instance, had an astonishing 2020,” says Scandinavian Tobacco Group (STG) Country Director Alastair Williams. “That’s down to a combination of factors such as more people working from home, people having more time on their hands and some fantastic weather last summer. These, and other factors, meant there were more opportunities for cigar smokers to enjoy a Half Corona when they might otherwise just have chosen a small or miniature cigar.”
Whatever the reason, the “astonishing 2020” that the product enjoyed is borne out in the latest market data from IRI. At a UK level, medium and large cigars grew by an eyebrow-raising 18.7% by value on an MAT basis to the end of March. Even more impressive is the finding that in the quarter to the end of March, medium and large cigars were showing value growth of 21.5%.
But here’s the thing: that sudden spike in larger cigar sales across the UK isn’t replicated in Scotland. IRI data for the same period shows that in the quarter to the end of March, medium and large cigar sales only grew by 7.8% in Scotland.
Granted, 7.8% growth in any tobacco category is remarkable, but why does Scotland lag so far behind the UK growth figure of 21.5%? And does that represent an opportunity for Scottish local retailers?
STG’s Williams certainly thinks so. “We know that it’s still miniature cigars that are the category drivers but the pleasing performance of Henri Wintermans Half Corona across the rest of the UK strongly suggests that Scottish local retailers could be missing a trick. While we can have no idea about what lies ahead in terms of the impacts of the pandemic, the increasingly impressive performance of the larger cigars sector indicates that demand is there – and retailers that are able to meet that demand will benefit. Cigars offer far bigger margins than factory made cigarettes and provide local retailers in Scotland with another opportunity to grow their profits by meeting what is clearly a growing demand for larger cigars.”
Interestingly, the total cigar market in Scotland over the last quarter has been very positive, growing by 5.2% by value on an MAT basis. That’s a remarkably resilient performance and clear proof that the category is in very good shape.
And Williams’ parting advice for retailers? “Miniature cigars and value are still the key drivers in the category in Scotland so brands like Signature and Moments are must stocks to meet that demand for great quality at great prices,” he concludes, “but if you don’t stock Henri Wintermans Half Corona, I would urge you to find some room on the gantry.”