The market for cigars and cigarillos in India has seen steady growth in recent years as consumption rises among high-income groups. Let's take a deeper look at the current landscape of this industry in India.
Introduction to cigars and cigarillos
Cigars are made from dried and fermented tobacco leaves and come in various shapes and sizes. The three primary types are little filtered cigars known as cigarillos, regular cigars, and large cigars. Cigarillos closely resemble cigarettes in size and filtered tips but are actually made from cigar tobacco. Regular cigars are the most popular size while large cigars are meant to be occasional treats. Top brands in India include Partagas, Romeo y Julieta, Hoyo de Monterrey among others.
Cigarillos are enjoying rising popularity due to their small size, filters, and relatively lower nicotine content compared to regular cigars. They are seen as an affordable luxury item. Popular brands are Backwoods, Swisher Sweets, Garcia y Vega. While regular and large cigars are confined to specialized shops, cigarillos are easily available in stores and kiosks.
Market size and trends
According to industry studies, the Indian cigar and cigarillos market was valued at around Rs. 550 crores in 2020. It has been growing at a CAGR of over 7% since 2015 driven by changing lifestyles and growing consumption in metros. Rising disposable incomes have made premium imports more accessible even as domestic alternatives flourish.
Cigar consumption is dominated by men in the age group of 25-45 years across metros. Cities like Mumbai, Delhi, Bangalore, Kolkata and Pune account for over 70% of total sales volumes. Occupying lucrative price points between cigarettes and beedis, cigarillos have found popularity among young professionals and students as an affordable indulgence product.
Lockdowns and restricted socialising during the pandemic did impact the industry initially. However, sales bounced back quickly as high-income individuals switched to online purchases and lounges adapted to offering home delivery and takeaway options. Demand has recovered to pre-Covid levels again.
Domestic production
While some popular international brands are imported, there has been rising domestic production of India Cigars And Cigarillos as well. Homegrown brands have improved their quality and variety to attract discerning local consumers. Notable Indian manufacturers include Vazhiveli Cigars, Nestor Cigars, and Kapila Cigar Company across Tamil Nadu, Kerala and West Bengal respectively.
Their products are priced 20-30% lower than imports while maintaining global production standards through advanced techniques and investments in infrastructure. Slow-burning wrappers, premium filler blends have helped Indian brands win market share in the premium domestic segment over 70%. Exports to neighbouring nations have also seen growth in recent years.
Policy and regulatory framework
Strict laws prohibit advertising and promotion of cigars like for cigarettes in India. As with cigarettes, graphic health warnings are mandatory on cigar packaging and Labelling of tobacco products rules are applicable. Cigars attract NCCD excise duties upwards of 60-70% along with applicable GST slabs.
While pro-tobacco lobby groups argue this increases illicit trade, authorities maintain such measures are crucial for public health objectives. The industry awaits further clarity on allowing duty-free import and export of cigars for personal consumption. Proposed amendments to COTPA 2003 may also bring e-cigars with tobacco heating products under regulation.
Challenges and outlook
Availability of cheap counterfeits and illicitly imported cigars remains a serious challenge. With affordable international labels retailing for 10-15% of MRPs they dent premium brands. Strict enforcement is required for effective IP protection and curbing tax evasion.
Large untapped rural markets remain under-penetrated due to lack of specialty stores, awareness and affordability issues. E-commerce is seen expanding reach through selections, offers. Product innovation too is vital as younger audiences emerge shaping consumption patterns.
Overall the future looks bright as rising affluence drives premiumization. Segment growth of 10% annually is expected to continue. Domestic incumbents expanding distribution nationally can gain considerably from 'Make in India' sentiments. With responsible marketing and regulation, India's cigar culture may thrive sustainably into the coming decades.
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According to IMARC Group latest report titled” Cigars and Cigarillos Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026”, the market is currently witnessing strong growth.
The global Cigars and Cigarillos market to exhibit moderate growth during the next five years.Market Trends:Cigar refers to a large roll of tobacco wrapped in a tobacco leaf, whereas a cigarillo is a slimmer and more extended version of a cigar.
Based on the high nicotine content, cigars and cigarillos have gained traction, especially among the high-dose nicotine consumers.Get a sample copy of this Report: https://www.imarcgroup.com/cigars-cigarillos-market/requestsampleThe rising consumer living standards supported by their inflating income levels are propelling the demand for premium tobacco products, such as cigarillos and cigars.
Furthermore, the easy product availability across several brick-and-mortar distribution channels, along with decreasing product tax rates, are also augmenting the market for cigars and cigarillos.
Additionally, the escalating demand for high-nicotine products have led to a rising shift from sheesha and cigarettes, towards cigars and cigarillos.
Besides this, numerous product manufacturers are launching cigars and cigarillos in innovative flavors, such as vanilla, wine, tea, candy, etc., to expand their existing consumer base.
