China: RGD Cigarette Brand Enters into International Market

Source from:  Tobacco Asia  07/02/2013

The RGD cigarette brand – a rising star developed by China Tobacco Hubei Industrial Co., Ltd.(CTHIC) in central China's Hubei Province – emerged victorious and caught much eyesight at the Protobex Asia/Intertabac Asia 2013 tobacco expo held in Manila on March 20-22, with its high quality and lower pricing.

The Protobex Asia/Intertabac Asia 2013 tobacco expo gathered a large number of representatives of tobacco industries around the world. CTHIC – which has been on an ambitious drive to go on international markets over recent years – turned out to be one of the most remarkable tobacco manufacturers at the three-day expo.

At the elegant and graceful booth of CTHIC, there were sample products of the RGD and the Yellow Crane Tower – another heavyweight cigarette brand of the company. The low-profile and concise design of the look of both the RGD and the Yellow Crane Tower without losing their dispositions and delicacy won much attention and favor. As a result, both participants in the expo and visitors would have their attention caught by the rich and fine sample products shown at the booth as they were passing by it.

As the No. 1 leading cigarette brand developed by CTHIC in its realizing its ambitious strategy of "going global", the RGD made its debut in markets in the Czech Republic in 2008, which signified the first step of the emerging cigarette brand in going on international markets. Afterwards, the RGD went on markets in Slovakia and Poland successively. In a period of merely more than one year, the RGD rapidly became one of the best-selling cigarette brands on markets of medium- and low-grade cigarettes in these countries. As far as all export-oriented cigarette brands of China's tobacco industry are concerned, the RGD ranked the third in terms of overseas sales in 2012, with an annual single-brand export volume of more than 300,000 boxes (3 billion cigarettes). Regionally, the RGD showed the best sales performance in markets in Europe, followed respectively by the Asia-Pacific region, the Middle East, Africa and America.

Talking about the development of leading target markets for future sales of the RGD, Bie Weimin, deputy chief of the International Operations Department of CTHIC, said that as tobacco markets in developed countries including the European Union nations and North American countries are gradually shrinking, and as competition at emerging markets in the Middle East, Asia, etc is turning increasingly intense, CTHIC has to shift its focus of market development on tobacco markets in Mexico, where the company is planning to strengthen the construction of sales channels and gradually extend operations onto markets in Central and South America. Meanwhile, CTHIC will manage to seize all opportunities and strive to develop and expand markets in Africa where demand for the supply of tobacco products has kept going up over recent years.

Generally speaking, it is usually quite difficult for a new cigarette brand like the RGD to rapidly enter emerging markets and realize stable sales in international markets in East European countries in a relatively short period of time. As a matter of fact, CTHIC cooperated with Philip Morris in launching in-depth market surveys in target markets, which actually played a leading role for CTHIC to accurately determine the marketing position of the cigarette brand in international markets. In comparison with higher grade brands, medium- and low-grade cigarette brands tend to win less loyalty from consumers, and their retail prices tend to be more sensitive. Therefore, CTHIC has defined the RGD as a "mainstream precious brand worth more than the value", which can easily win recognition and favor from middle to low income earners aged between 25 and 35. Meanwhile, medium- and low-grade products take over 60 percent of the shares of a majority of markets. With vast marketing potential, markets of medium- and low-grade products well deserve the reputation as "mainstream markets". These two factors prove to be quite favorable for the RGD to rapidly win recognition from consumers in international markets.

For CTHIC, it is well aware that accurate determination of the marketing position has been crucial to rapid growth of the RGD while effective market promotion and extensive brand popularity are similarly important. Therefore, while doing a good job of terminal show of products, e.g., by well making counter display at retail shops, well designing cigarette stands, light boxes, LED screens, etc, CTHIC would put on show various advertising materials at retail terminals, and would present tie-in packages with gifts at large shopping malls, in efforts to attract more eyesight from consumers. Besides, the company would also hire promotion specialists to conduct one-on-one sales promotion, significantly increasing chances of trial purchase. The adoption of such multiple ways of promotion has powerfully contributed to enabling the RGD to rapidly enter international markets over recent years.

The quite remarkable rapid sales growth of the RGD just a few years after its debut has made CTHIC more determined to develop international markets. However, as international markets are rather complicated and ever changing, and as differences among various regions are turning increasingly obvious, it is inevitable for the RGD to encounter various challenges on its way to go on international markets. For example, under the influence of increasingly strict policies on tobacco control adopted by the governments of all countries, tobacco advertising and the room for the growth of international tobacco markets may be subject to strict restriction, and the RGD, with a marketing position based on "high quality and lower pricing", will face very serious challenges in improvement of the structure of products. In comparison with such big transnational brands as Marlboro, the RGD is yet to significantly improve itself in terms of the image and reputation as an international brand.

Therefore, under such an international situation, CTHIC in efforts to increase existing market shares and develop new markets, is planning to establish new distribution channels under its own control and exclusively for its own use, and is striving to turn the RGD into an international brand with higher reputation and greater influence. In market development and sales promotion, CTHIC will draw on the successful experience of transnational tobacco giants and form alliances of interests with powerful dealers with well established distribution networks and with extensive coverage, in order for newly developed brands to rapidly enter regional markets, e.g., by holding each other's shares. In the development of brands, CTHIC will strive to accurately determine the marketing positions of newly developed brands, foster the globally unified image of brands, increase the value of brands, adhere to the policy of intensive and meticulous development of brands, do a good job of terminal maintenance and market advertising of brands.

The unremitting efforts and pursuit by CTHIC at international markets will definitely enable its competitive cigarette brands like the RGD and the Yellow Crane Tower to further promote and extend their image and influence at international markets around the world. Enditem