www.shcri.com — From January to June of 2009, China sold 23.889 million chests of cigarettes (1.19445 trillion cigarettes) in total, rising by 3.6% YOY. In the first half of 2009, Chinese cigarette sales volume was increased by 841,000 chests (42.05 billion cigarettes) YOY. Compared with the same period of the last year, the growth volume was reduced by 51,000 chests and the growth rate was reduced by 0.5%. Compared with the same period of 2007, the growth volume was reduced by 481,000 chests and the growth rate was reduced by 2.8%. Comparing the historical data of the same period in recent years, the growth trend of stable slowdown of the cigarette sales volume has been obvious and the growth rate of the sales volumes has been slower than the structure upgrading rate.

In the first half of 2009, China exported 54,700 tons of tobaccos, rising by 10.84% YOY. China exported 6.394 billion of cigarettes, rising by 35.87% YOY. Cigarettes produced by enterprises abroad and Sino-foreign cooperation were 8.71 billion, rising by 40.4% YOY. The sales volume was 9.24 billion, rising by 55.9% YOY. The total value of import and export tobacco products was 1.22 billion USD, rising by 46% YOY. The total export value was 398 million USD, rising by 40.33% YOY.

In the first half of 2009, Chinese important cigarette brands remained increasing rapidly. The sales volume of 30 important brands was 12.7133 million chests (635.665 billion cigarettes), rising by 1.8997 million chests (94.985 billion cigarettes) and by 17.35% YOY. This was higher than the national average growth rate by 17.35%. The sales proportion reached 53.49%, rising by 5.68% YOY. The sales revenues of 30 important brands reached 275.22 billion RMB (41.078 billion USD), rising by 46.05 billion RMB YOY and by 20.1%, which was higher than the national average growth rate by 7.33%.

In the first half of 2009, the concentration ratio of Chinese cigarette brands was enhanced. From January to June, among the national important brands, the sales volume of Baisha, Hongtashan and Honghe exceeded 1 million chests (50 billion cigarettes) each. The sales volume of Hongmei, Huangguoshu, Double Happiness, Yun Yan and Huangshan exceeded 700,000 chests (35 billion cigarettes) each. The sales concentration ration of the top 10 brands (based on sales volumes) reached 68.57%. Among the first-class cigarette brands, the top five brands (based on sales volumes) were Furongwang, Chunghwa, Yuxi, Huanghelou and Liqun with the sales concentration ratio of 73.89%. Among the second-class cigarette brands, the top 5 brands with largest sales volumes were Liqun, Qipilang, Huangshan, Pride and Nanjing with the sales concentration ratio of 82.15%. Among the third-class cigarette brands, the top 5 brands with largest sales volumes were Hongtashan, Double Happiness, Yun Yan, Baisha and Red Double Happiness with the sales concentration ratio of 65.59%.

In the first half of 2009, the growth rates of Diamond, Pride and Hongtashan, whose YOY growth rates of sales volumes were the largest among Chinese important cigarette brands, were 66.02%, 63.30% and 32.66% separately. The growth rates of 15 brands were lower than the average level. Among them, the growth rates of Suyan, Haomao and Golden Bridge were less than 10%; the growth rates of Hongmei and Zhenlong were reduced by 7.51% and 1.6% YOY separately. Though the entire industry remains growing rapidly, some core brands have slowed down their developing steps.

Chinese central and western areas and other backward regions have become the main increasing areas for Chinese cigarette sales. Stimulated by the enhancement of the west development policy by Chinese government and affected by the financial crisis and home returns of rural labors, Sichuan, Henan and Hebei became the three regions with the highest growth rates of Chinese cigarette sales volumes in the first half of 2009. Tibet, Guizhou and Sichuan became the three regions with the largest growth rates of cigarette sales amount, which was quite different from the previous years. Among the 18 provinces whose growth rates were lower than Chinese average level, most provinces were in the east coasts and developed regions.

Currently, the focus on the brand competition in Chinese cigarette market has been changed. With the improvement of the cigarette consumption level and the readjustment of the cigarette price class, the market with the emerging price range where the retail prices are 70 RMB (10.2 USD) per 200 cigarettes, 150 RMB (22 USD) per 200 cigarettes, 170 RMB (24.8 USD) per 200 cigarettes and 300 RMB (43.8 USD) per 200 cigarettes is expanding and more and more brands are joining this market to improve both the sales scale and the product structure.

Source: China Research and Intelligence

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