Scandinavian Tobacco Group (STG) released its third-quarter 2025 results, reporting net sales of DKK 2.4 billion (≈ $340 million), down 3 percent year over year but holding steady on an organic basis with 0.3 percent growth. The handmade cigar category—home to brands such as CAO, Cohiba, Macanudo, and Partagas—offset softness seen in machine-rolled cigars and other tobacco products.
Earnings before special items came in at DKK 519 million, representing an EBITDA margin of 22 percent, slightly below the same period last year due to market mix and pricing pressure in Europe’s value cigar category. Free cash flowreached DKK 173 million, while adjusted earnings per share were DKK 3.4. STG CEO Niels Frederiksen described the quarter as one of “early stability in sales but continued margin compression,” emphasizing that growth in handmade cigars and nicotine pouches has helped balance the effects of a challenging European market environment.
What This Means for Retailers
For cigar retailers and tobacconists, STG’s latest report reinforces the resilience of the premium handmade segment. Sales of hand-rolled cigars remain stable despite broader macroeconomic pressure, showing that consumers continue to prioritize quality experiences even in tighter spending climates. Retailers who emphasize premium brands, knowledgeable service, and curated humidor experiences are likely to see sustained interest through the holiday season and into early 2026.
That said, STG’s warning about pricing pressure and down-trading trends in Europe serves as a cautionary signal for the year ahead. As some consumers shift toward value products, maintaining balanced inventory—without over-committing to slower-moving SKUs—will be key. STG’s acknowledgment of foreign-exchange sensitivity also suggests potential pricing adjustments in early 2026, making communication with distributors and brand reps especially important.
Perhaps most significant for retailers is the company’s upcoming five-year strategy announcement on November 20, which is expected to outline fresh investments in handmade cigars, global branding, and retail partnerships. The forthcoming plan could shape how STG supports its retail network and positions its portfolio for continued growth in the U.S. and international markets.
Full-Year 2025 Outlook
STG has narrowed its full-year guidance based on greater visibility heading into Q4 2025:
- Net Sales: Expected between DKK 9.1 – 9.2 billion (≈ $1.3 billion)
- EBITDA Margin: 19.5 % – 20.5 %
- Free Cash Flow: DKK 0.8 – 1.0 billion
- Adjusted EPS: DKK 10 – 12
Management identified U.S. consumer sentiment, retailer inventory decisions, and the USD/DKK exchange rate as key variables influencing year-end results.
Looking Ahead
While market pressures remain, STG’s performance in handmade cigars continues to highlight the category’s long-term strength. For retailers, this underscores the importance of leaning into craftsmanship, storytelling, and consistent product availability—three pillars that have kept the premium cigar segment resilient through changing economic tides.
As the company prepares to unveil its new five-year strategy, retailers can expect renewed emphasis on global brand growth and partnerships that strengthen the premium cigar ecosystem.
You can view STG’s full Q3 report by clicking here.