Cuban cigars such as Romeo y Julietta, Montecristo and Hoya de Monterrey are the main products in the Italy luxury cigars market. Such products enjoy brand recognition thanks to longstanding and recognised expertise and know-how. Cuban luxury cigars remained famous in Italy at the end of the review period, and enjoy a solid worldwide reputation for quality. In Italy, TV advertisements for tobacco, including cigars, are prohibited, as are advertisements in magazines.
In volume terms, luxury cigars registered a decline in 2012. Despite product development, luxury cigars tended to suffer from the competition posed by cheaper alternatives such as mid-range cigars and cigarillos. Conversely, luxury cigars recorded positive growth in value terms. This was chiefly triggered by price increases. Additionally, the price volatility of raw materials and the cost of transport for imports impacted on retail prices, hence the overall rise in value terms in 2012.
The indulgence trend is expected to continue, but at a slower pace. Increasing awareness of cancer should hamper the performance of luxury cigars in Italy in coming years. Additionally, consumers are expected to switch to the cheapest alternatives, such as cigarillos. Overall, consumption of luxury cigars should remain driven by more affluent consumers over the forecast period, with constrained purchasing power reducing popularity among the middle-income segment. This will contribute to the predicted constant value CAGR of -7%.
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