Middle East Cigar and Tobacco Market Report Segmented By Product Type (Cigars, Cigarettes, and Others), By Gender (Male and Female), By Packaging Type (Boxed Cigars, Tins & Pouches, Cartons, and Single Packs), By Price Range (Premium, Mid-Range, and Economy), and By Country (Kingdom of Saudi Arabia, UAE, Qatar, Oman, Bahrain, Kuwait, Rest of Middle East)

Introduction

The Middle East cigar and tobacco market is experiencing significant changes, driven by evolving consumer preferences, regulatory shifts, and economic factors. Despite the global decline in tobacco consumption due to rising health concerns, the Middle East remains a promising market, particularly for premium tobacco products, including cigars, owing to high disposable incomes, especially in countries like the UAE, Qatar, and Saudi Arabia. The middle east Cigar and Tobacco market was valued at USD 72.48 Bn in the year 2023, and the market is poised to grow at a steady rate over the forecast period. The market is expected to reach USD 87.19 Bn by the end of 2031. There is a rising demand for luxury tobacco products among affluent consumers and expatriates, driven by their preference for high-end experiences. The growth of premium cigar lounges in urban centers further supports this trend.

Market Dynamics

Global brands are increasingly entering Middle Eastern markets, offering their products through both online and offline channels. Governments are beginning to regulate these products separately from traditional tobacco, with many adopting more lenient taxation or regulatory approaches due to their perceived lower health risks. Thus, tobacco companies operating in the Middle East are expanding their portfolios to include non-combustible products, catering to the shifting preferences of consumers. This diversification allows companies to capture new market segments and mitigate the decline in demand for traditional cigarettes and cigars. Non-combustible tobacco products often face less stringent regulations compared to traditional cigarettes and cigars. While still taxed and regulated, governments may treat these products more favorably due to their perceived reduced harm, which can lower barriers for market entry and expansion.

The demand for premium cigars and luxury tobacco products is growing in the Middle East, particularly in wealthier countries such as the UAE, Qatar, and Saudi Arabia. Affluent consumers and expatriates are driving this trend, seeking high-quality, hand-rolled cigars and specialty tobacco products as symbols of status and luxury. Premium cigars, unlike mass-market cigarettes, are often associated with indulgence, celebration, and leisure. They are consumed in high-end social settings such as cigar lounges, exclusive clubs, and luxury hotels, where consumers can enjoy a sophisticated and relaxed smoking experience. Brands like Cohiba, Davidoff, and Montecristo are well-established in the region and continue to see growing demand from both local high-net-worth individuals and international tourists. These premium brands often target events, hospitality, and tourism hubs, where they can position their products as part of a luxurious lifestyle. As the popularity of premium cigars rises, there is a parallel increase in the number of exclusive cigar lounges, high-end retail outlets, and specialized tobacco stores. These spaces offer consumers an immersive experience, where premium products are enjoyed in luxurious surroundings.

Segmental Analysis

The Cigar and Tobacco Market Analysis includes a detailed assessment of key segments in the industry.

Based on product type, the Cigar and Tobacco market is categorized into Cigars, Cigarettes, and Others. Cigarettes are expected to dominate the Middle East Cigar and Tobacco market with 68.9% of market share in 2023 due to their widespread consumption, affordability, and convenience. Cigarettes are often viewed as more accessible to a larger portion of the population, given their lower price points compared to cigars and other tobacco products. Additionally, cigarettes have a long-standing cultural presence in many Middle Eastern countries, with established consumption patterns and marketing strategies that cater to both local populations and international consumers. The influence of global tobacco brands, along with the rising trend of smoking among younger demographics, has further entrenched the dominance of cigarettes in the market.

Based on gender, the Cigar and Tobacco industry is segmented into male and female. The male segment dominates the market with 80.2% of the market share in 2023. Traditionally, smoking cigars and tobacco products has been associated with masculinity in many Middle Eastern countries, often linked to status, power, and adult leisure activities. Additionally, social norms in the region have reinforced these behaviors, with tobacco consumption being more publicly acceptable for men. While women's participation in the market has grown in some areas, societal pressures and cultural expectations continue to discourage female engagement in smoking-related activities. As a result, male consumers account for a significant portion of the market, both in terms of consumption and preference.

Based on price range, the market is divided into Premium, Mid-Range, and Economy. The premium segment is anticipated to exhibit robust growth of 2.79% during the forecast period due to a combination of cultural, economic, and lifestyle factors. In the Middle East, luxury products, including premium cigars and tobacco, are often seen as symbols of status, wealth, and sophistication, which increases their appeal among affluent consumers. Additionally, rising disposable incomes and a growing appetite for luxury goods in several Middle Eastern countries contribute to the market's preference for premium offerings. Moreover, premium cigars and tobacco products are typically associated with higher quality and craftsmanship, making them more attractive to connoisseurs and those seeking an exclusive experience. This demand is further fueled by the region's strong tradition of social gatherings and celebratory events where premium tobacco products are often enjoyed, reinforcing the market's inclination toward premium price ranges.

Increasing urbanization, rising disposable incomes in key markets like the UAE and Saudi Arabia, and the evolving preference for premium and alternative tobacco products. This steady growth trajectory highlights the resilience of the market, with a shift toward more premium, niche segments, and new product innovations offsetting declines in traditional smoking categories. However, the market will continue to be shaped by regulatory frameworks, health campaigns, and changing consumer preferences in the coming years.

Competitive Analysis

The Middle East Cigar and Tobacco market is fairly consolidated in terms of key players with the top 4 players contributing to over 65% share in the industry. Some of the key players in the industry are Philip Morris Products S.A., British American Tobacco p.l.c., JTI - Japan Tobacco International, Imperial Brands plc, Eastern Company, Gulf Tobacco, KT&G Corp., The Ababil Group, Casdagli Cigars, and others. The key players in the industry are actively pursuing strategic developments such as product launch, partnership agreements, etc to gain further foothold in the market.

Some of the key developments are as follows:

• In April 2022, PMI secured a 25% stake in United Tobacco, a company that won a disputed license to manufacture and market cigarettes in Egypt. This move marked PMI's significant entry into one of the world's largest and most desirable tobacco markets.
• In 2015, JTI acquired Tehran-based Arian Tobacco Industry, a significant player in the Iranian tobacco market. This acquisition enabled JTI to capture a 40% market share in Iran, positioning the company ahead of competitors like British American Tobacco (BAT) and enhancing its footprint in the Middle East.

Health-conscious consumers are turning to organic and hand-rolled cigars as they seek more sustainable, additive-free alternatives. This is particularly appealing to high-net-worth individuals who value craftsmanship and exclusivity. With increasing health awareness, non-combustible tobacco products like heated tobacco and vaping are gaining traction as perceived healthier alternatives, providing opportunities for market growth. There is a growing demand for low-nicotine and flavoured tobacco products, particularly among younger consumers and expatriates. Flavored tobacco, including cigars and shisha, remains popular for social settings, while low-nicotine options appeal to health-conscious smokers.

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Segmentation

• By Product Type
  • Cigars
  • Cigarettes
  • Others
• By Gender
  • Male
  • Female
• By Packaging Type
  • Boxed Cigars
  • Tins & Pouches
  • Cartons
  • Single Packs
• By Price Range
  • Premium
  • Mid-Range
  • Economy
• By Country
  • Kingdom of Saudi Arabia
  • UAE
  • Qatar
  • Oman
  • Bahrain
  • Kuwait
  • Rest of Middle East