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Cigars and Cigarettes

September 23, 2024 by
Samir Shrestha

Cigar and Cigarette

Introduction

Cigar and cigarettes are in a battle that is as old as the tale goes. They are two distinct forms of tobacco products that differ in size, production, composition, and other various aspects. Although both of these products are tobacco-based, there are a couple of certain characteristics that differentiate them from one another. One of their distinct characteristics are the way they are lit and smoking style. 

Cigarettes are composed of finely cut tobacco leaves that are rolled in a paper, whereas cigars are crafted using whole tobacco leaves that are fermented and aged to develop their unique flavor and characteristics. Cigars are usually thicker and larger in size than cigarettes. The shape and size of a cigar contributes to its overall smoking experience allowing for a longer smoking session. On the other hand, cigarettes are smaller and more uniform in shape designed for quick consumption. Cigarettes are ideal for shorter smoking breaks. 

In this blog, we will talk in brief about cigars and cigarettes, understanding their market presence, product differences, consumer demographics, retail considerations, and legal and compliance issues for making informed business decisions. 


Market Overview

As of 2024, the global cigar market is estimated at around USD$23.5  billion. This market value is expected to expand at a 4.9/5 CAGR and reach USD$37.9 billion by the end of 2034. Talking about the regional data analysis in the USA, the revenue in the cigars market reached an impressive USD$13.3 billion in the United States. This is expected to grow at the rate of 4.2% CAGR by 2028. In addition, a growth rate of 1.5% is expected for 2025. 

On the other hand, the cigarette market is estimated at around USD$854.0 billion in 2024 worldwide. In 2024, the cigarette market is estimated to be worth around USD$82.7 billion in the United States alone. The market is expected to experience an annual growth rate of -0.17% CAGR by 2028. However, a slight decline in volume growth with a rate of -3.2% is expected in the cigarette market in 2025. 

Cigars market has been growing consistently since the 20th century in terms of product innovation, price sensitivity, solid distribution system, and product premiumization. This evolution is expected to grow significantly over the years. As the smoking cigars trend is growing with young customers, the addition of diverse flavors such as chocolate, vanilla, wine, and tea to cover up the bitter taste of tobacco plays a crucial role in fueling the demand. Besides social smoking, there is also a rising trend of gifting premium cigars on special occasions like birthdays and weddings which also drives market growth. 

The cigarettes market is heavily dominated by traditional cigarettes accounting for the majority of sales revenue globally. The growth of the cigarette market is driven by several factors out of which Nicotine remains a primary driver. Likewise, consumers' preferences continue to shift towards products that offer a balance between enjoyment, reduced health risks, and alignment with personal values and lifestyle choices. Consumers tend to go for cigarettes offering wide flavor options like fruit, spice, menthol, and natural tobacco. Likewise, consumers are seeking tobacco products with reduced harmful toxins and nicotine levels. 

In the USA, sales of any kind of tobacco products including e-cigarettes under age 21 is prohibited. Likewise, federal regulations prohibit free samples of all tobacco products and smokeless tobacco products free samples are limited to certain age-restricted venues under several conditions. Studies show that rules and regulations similar to these influence the overall tobacco market.  


Product Differences

Cigars are made up of filler, binder, and wrappers which are usually air-cured and fermented tobacco wraps either in tobacco leaf or paper that contains tobacco extract. Cigars are carefully handcrafted using high-quality tobacco leaves for filler, binder, and wrapper, each chosen for their unique texture and flavor. Cigars are hand rolled and each step is performed by skilled hands and a discerning eye since any imperfections in the rolling process can affect the burn, draw, and flavor of the cigar. 

These hand rolled cigars represent the pinnacle of flavor and craftsmanship in the cigar industry. Cigars are typically 3 to 7 inches long with 20 to 60 millimeters in diameter which can differ from a brand to another. It is slow burning and lasts for anywhere from 30 minutes to two hours or more.

On the other hand, cigarettes are made up of tobacco, chemical additives, wrapping paper, and a filter. The tobacco filler in cigarettes is made out of stems and leaves of tobacco plants that are mixed with flavorings, water, and additives. Other than this, cigarettes contain 600 ingredients and known toxins and carcinogens such as acetone, arsenic, lead, and formaldehyde. 

The machine rolled cigarettes are mass-produced and can be assessed by several factors like consistency, materials used, and the manufacturing process. Machine-made cigarettes are consistent in shape, size, and filler ensuring a consistent smoking experience. The machine rolling system offers a higher precision and efficiency that delivers a smooth smoking experience. Once a cigarette is lit up, it lasts for a maximum of five to 10 minutes and delivers up to 20 to 30 puffs at max. It is 70 to 100 millimeters i.e. 2.75 to 4 inches and about 8 millimeters in diameter.

Cigars have a complex and rich flavor profile such as woody, spicy, sweet, or earthy notes throughout the smoking experience. They are usually drawn into the mouth just to savor the taste and aroma and not inhaled into the lungs. On the other hand, cigarettes have a consistent flavor which is milder compared to cigars. Cigarette smoke is inhaled into the lungs providing a quick delivery of nicotine. Both cigars and cigarettes offer a distinct experience in terms of shape, sizes, duration, and overall smoking experience.

The consumer usage patterns between cigarettes and cigars significantly differ due to variation in their cultural contexts and the product themselves. Cigars are usually smoked less frequently, some reserve them for special occasions like weddings, birthdays, or specific times. Cigarettes are commonly smoked on a daily basis and often multiple times a day. The short smoking duration makes them suitable for consumption during breaks, driving, and social interactions, while cigar is usually smoked during leisure time at bars, lounges, or at social gatherings. 


Consumer Demographics

Marketing of tobacco is generally targeted at seasoned smokers, women, and youths aged 35 to 65 who are eligible for using any kinds of tobacco products. Cigar marketing is often targeted at college graduates and professionals, executives, and business owners. Likewise, cigarette smokers are aged between 18 to 45 years old out of which most of the youngsters are high school graduates or even less. Cigar smokers are usually older and wealthier who view smoking as a leisure activity associated with luxury, while cigarette smokers are often younger and smoke for stress relief and habit. Cigarettes are often purchased from convenience stores, supermarkets, and gas stations, while cigar smokers purchase their goods from premium brands and online shops. 

Cigar is often seen as a luxurious and ritualistic experience smoked to enjoy its flavor and the craftsmanship. It is often smoked during special occasions and social gatherings as a leisurely activity to be savored slowly. While cigarettes are easier and convenient for a quick smoke that fits perfectly into a fast-paced lifestyle. Some cigarette smokers refer to it as a means to manage anxiety and stress. Likewise, nicotine dependency also plays a crucial role for choosing cigarettes over cigars. 

Talking about social and cultural factors, cigars are cited as a symbol or celebration and a part of traditional rituals. They are often glamorized with sophistication and elite lifestyles providing a sense of belonging in elite social circles. Nonetheless, cigarette smoking is heavily influenced by social circles and peer influence. It is noted that cigarettes are often associated with freedom, modernity, and rebellion. They are affordable than cigars and easily accessible making them a common choice for the public. 


Retail Considerations

Cigars

Cigars require a specific inventory and stock management system due to their storage requirements and shelf life. They are required to be stored in a controlled environment with a temperature around 70 degrees Fahrenheit and precise humidity levels between 65% to 72%. Also, to maintain the freshness and quality of cigars, humidors are used in both retail and storage settings and maintain humidity levels to prevent them from drying and becoming moldy. Another crucial storage requirement is stock rotation which ensures that the older stock is sold first. 

For premium and hand-rolled cigars, profit margins can be solid as pricing strategies often reflect the quality and brand image of the product. High quality cigars have high pricing designed to attract clients willing to pay a handful amount for quality. The tobacco used in premium cigars are often grown in specific regions which adds to the cost. Likewise, proper storage solutions, branding, marketing, and production cost can significantly affect the pricing. 


Cigarettes

In terms of storage, cigarettes have less requirements compared to cigars. While they do not require humidors, cigarettes need to be kept in a dry place with a stable room temperature and away from direct sunlight to prevent them from going stale. Cigarettes have a longer shelf life than cigars, however, they need to be monitored for any signs of degradation and expiry dates. In general, cigarettes have lower profit margins per unit compared to premium cigars but it benefits from higher sales volume and faster turnover. 

Competitive pricing and taxation policies also influence the pricing strategies for cigarettes making them more price sensitive. The budget friendly cigarettes drive significant volume sales by catering to a broad customer base. Budget cigarettes are mass produced using blended tobacco, additives, paper, and filters with an industrialized and automated process which reduces labor costs making them less expensive compared to premium cigars. Although cigarette pricing is comparatively low, the high sales volume compensates the profit margins which helps maintain cash flow and stock freshness. 


Legal and Compliance Issues

In the USA, advertising cigars on television and radio are strictly prohibited by the Tobacco Control Act (TCA). Any sort of other cigar ads must include health warnings and risks of tobacco use. Likewise, the manufacturers and retailers should ensure that their promotional materials do not appeal to underage individuals and minors. Likewise, companies should comply with local laws and regulations regarding cigar and cigarette advertising. 

Another crucial restriction is the age verification for cigar and cigarette sales. Some jurisdictions have separate age limits for cigars and sellers are required to verify the age of customers to avoid selling any tobacco goods to minors. As for cigarettes, the minimum legal smoking age is between 18 or 21 and sellers must verify the age of customers before the purchase.

Cigar sellers need specific permits or licenses which involve compliance checks, fees, and adherence to regulations which can vary from each jurisdiction. For cigarettes, there are stricter licensing requirements which involve fees, background checks, and adherence to specific regulations. The stricter laws for cigarettes are to prevent underage access. Although cigars have more lenient advertising regulations, they still need to avoid making misleading health claims and targeting minors. 


Conclusion

In conclusion, both cigars and cigarettes have different product features and each have distinct production methods although both of them are tobacco products. The advertising restrictions for cigars are somewhat lenient allowing more flexibility in marketing and has an age limit which might differ from the minimum smoking age for cigarettes. Cigarette advertising and selling has stricter laws and regulations to prevent sales to minors. 

Cigar wholesalers and retailers should comply and understand local advertising regulations, secure appropriate licenses, and should stay informed about any kind of changes in local regulations. Cigarette dealers are required to have strict age verification measures, stricter advertising bans, and obtain a necessary license. 

Business owners should train their employees on ad or sales regulations, age verification methods, and technology to prevent underage sales. They should have up-to-date records of their license at all times, and adhere to each rule and regulation.

Samir Shrestha September 23, 2024
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