STG/Q2: Handmade Cigars Confirm Their Role as a Growth Driver

Despite an expected decline in the global handmade cigar market this year, Scandinavian Tobacco Group continues to gain market share, particularly in the United States.

Scandinavian Tobacco Group’s (STG) second-quarter 2026 results confirm the strong performance of its handmade cigar business. As the Danish group seeks to stabilize its traditional machine-made cigar and smoking tobacco activities, handmade cigars are becoming its main growth driver. In the first six months of the year, sales in this category increased by 6%, following an 8% rise in the first quarter. Growth reached 5% in the second quarter alone.

This performance is all the more notable because STG expects the global handmade cigar market as a whole to decline by around 4% over the full year. The group nevertheless says it has gained market share among distributors and retailers in the United States, while its online and specialist retail activities have broadly maintained their market share.

This performance has been achieved in what STG describes as a particularly competitive environment, helped by a more tactical pricing policy and a greater focus on its strategic brands.

Handmade cigars generated DKK 876 million (approximately €117 million) in revenue in the second quarter, up 5%. For the first half of the year, sales reached DKK 1.536 billion, or nearly €206 million, with a gross margin of 43.3%, up from 42.7% a year earlier.

STG is placing particular emphasis on four “power brands”: Macanudo, CAO, Cohiba (Silencio outside the United States) and Alec Bradley. The group says these brands account for around 23% of handmade cigar sales, with their share increasing slightly in direct-to-consumer channels. Cohiba/Silencio and CAO had notably recorded double-digit growth in the first quarter.

Focus 2030 Strategy

The Focus 2030 strategy is built around this very development: making handmade cigars a “growing and increasingly attractive” business, firmly rooted in the United States and supported by expanding international sales. STG aims to increase its share of the U.S. market from around 13% to more than 15% by 2030.

To achieve this, the group intends to rely on its brand portfolio as well as its strong direct-to-consumer distribution network, particularly online sales and its retail store network.

By contrast, the other activities of the Copenhagen-listed Scandinavian group remain under pressure: sales of machine-made cigars and smoking tobacco declined by 4% in the first half. STG also experienced an exceptional quality issue during the second quarter involving tobacco intended for machine-made cigars, resulting in inventory write-offs and a DKK 35 million charge (approximately €4.7 million).

For 2026, STG is maintaining its guidance. The group still expects global handmade cigar consumption to decline by 4%, but believes that trends observed since the beginning of the year are slightly better than expected. In this context, handmade cigars clearly emerge as the key asset in the Danish manufacturer’s new strategy.

Laurent Mimouni