China: New Chinese-Style Cigar Launched

Source from:  Tobacco Asia  11/15/2013

China Tobacco Hubei Industrial Co., Ltd. (CTHIC) in central China's Hubei province – one of the four cigar manufacturers in China – has presented to the market a new Chinese-style cigar product honored as a new generation and a new category of cigars with unique characteristics.

The new cigar product – named Xueyaxiang (Elegant Aroma of Cigars) – emerges as a new member of the time-honored Yellow Crane Tower brand family of CTHIC.

The development of Xueyaxiang is the result of an arduous course of intensified efforts by the tobacco industry of China to develop Chinese-style tobacco products – both cigarettes and cigars – over the past few years.

Chinese-style cigar imperative

In recent years, leading Chinese cigarette brands have all undergone rapid development. In 2012, the 27 key cigarette brands designated by the State Tobacco Monopoly Administration (STMA) generally maintained a momentum of favorable and sustained development amid high economic growth and in an ever changing complicated external environment. In the whole of 2012, the annual output of the 27 key brands reached a total of 36.63 million cases (1,831.5 billion cigarettes), an increase of 4.31 million cases year-on-year. In the year, the annual output of cigarettes of Grade Three and higher of the 27 key brands amounted to 32.13 million cases, up 5.94 million cases year-on-year.

However, viewing the entire tobacco industry from an all-round perspective, we find that despite the limitation of total annual production quotas issued by STMA, the rapid growth of cigarette production in China seems to have reached a ceiling. An outstanding indicator is the obvious slowdown in annual growth rate and increment of the 27 key cigarette brands. Rationally judged, though annual increment is guaranteed under the system of state tobacco monopoly in China, we have to get out of the conventional thinking of high growth in tobacco production.

Because of an obvious slowdown in annual growth rate of cigarette production and at a time when annual production increment is expected to reach a ceiling, how to open up yet another blue sea market now appears to be very necessary. Judged by the present market situation, development of Chinese-style cigar products seems to be a wise choice.

Accelerated development of Chinese-style cigar

Development of domestic production of cigars has always been a lukewarm topic. Yet, on April 18, 2013, we seemed to have caught a signal that there could be accelerated development of markets of home-manufactured cigars.

On April 18, 2013, STMA held a symposium on cigar marketing in Chengdu City of southwest China's Sichuan province. The meeting summed up and analyzed the status quo of cigar marketing and the marketing situation faced by the cigar manufacturing sector of the tobacco industry and made arrangements for strengthening cigar marketing.

In an address delivered at the meeting, STMA deputy director-general He Zehua pointed out that to boost domestic cigar marketing it was essential to correctly understand both cigar products and cigar cultures and the status quo of marketing of home-manufactured cigars, and it was imperative to establish confidence, specify guidelines, exert all advantages available and manage to maintain the favorable development momentum. He called for adherence to the orientation of "coordination between the manufacturing and commercial sectors of the tobacco industry in promoting the development of cigar marketing" to enable Chinese-style cigars to meet the favor of Chinese consumers and take on elements of Chinese cultures and to form a cigar marketing model with Chinese characteristics. He urged efforts to make explorations for developing a new model for Chinese-style cigar marketing, specifically define the Chinese-style cigar consumer society, vigorously develop target consumer groups, make a use of professional teams, specialized places and exclusive webs to develop exclusive operations, promote advertising and cultural marketing and strengthen and deepen cooperation and coordination between manufacturing and commercial enterprises in order to realize terminal breakthrough through accurate marketing.

What we need to notice here is that in his speech STMA deputy chief used the wording of "Chinese-style cigars". Then, what are Chinese-style cigars? For the time being, we can call them cigars meeting the favor of Chinese consumers that are full of elements of Chinese cultures and that have unique aromas and flavor characteristics.

Besides the concept of "Chinese-style cigars", cultures and marketing are two other aspects that we need to address. It is perceivable that the April 18 symposium was also meant to encourage both manufacturing and commercial enterprises to make a breakthrough in cigar production and marketing from the perspectives of cultures and marketing. Therefore, after the conclusion of this meeting, there was high expectation about what specific approaches would be adopted in promoting the development of domestic cigars production and marketing.

Who are to create a blue sea market?

Generally speaking, the status quo of domestic production and marketing of cigars is far from meeting the general level of cigarette production and marketing by the tobacco industry in China, and the general level in other countries. Home-manufactured cigars now lag far behind big transnational cigar brands in terms of raw materials supply, reputation, product quality, brand communication, adoption of marketing models, etc. Besides, home-manufactured cigars have mainly been low-end products, with relatively weak competitiveness. Therefore, there is still a long way to go to embark upon the path of rapid development in both production and marketing.

Presently, there are four cigar manufacturing enterprises in China – China Tobacco Chuanyu Industrial Co., Ltd. in southwest China, CTHIC in central China, and China Tobacco Anhui Industrial Co., Ltd. and China Tobacco Shandong Industrial Co., Ltd. in east China. According to official statistics, there are 64 specifications of home-manufactured cigars in 10 brands, and 174 specifications of imported cigars in 23 brands. From 2008 to 2012 the sales volume of home-manufactured cigars grew from 145 million to 326 million with an average annual increment of 22.5%. However, the general sales volume was obviously small. In December, 2012, STMA issued the Catalogue of Key Cigar Brands of China's Tobacco Industry which specifically includes the four cigar brands of The Great Wall, Maoda, Wang Guan (Crown) and General into the scope of key brands of tobacco products of the tobacco industry for regular assessment.

On April 20 – just two days after the April 18 symposium on cigar marketing, top leaders of Hubei province, including Secretary Li Hongzhong of the Chinese Communist Party Hubei Provincial Committee, provincial governor Wang Guosheng and deputy secretary Zhang Chang'er of the Chinese Communist Party Hubei Provincial Committee, met in Hubei's provincial capital city of Wuhan with a delegation headed by STMA director-general Jiang Chengkang. During the meeting, the two sides exchanged views in a heated and in-depth way on the development of the tobacco industry of Hubei, particularly the development and innovation of the Yellow Crane Tower cigarette brand of CTHIC It was at this meeting that CTHIC unveiled its ambitious plan to develop and present to the market Xueyaxiang. Therefore, the meeting witnessing the birth of Xueyaxiang as a new member of the time-honored Yellow Crane Tower brand family. This was actually the first time for the tobacco industry to specifically unveil the target of developing a new generation and a new category of cigars with unique characteristics and with the relevant intellectual property rights exclusively owned by China.

According to CTHIC, Xueyaxiang is a new generation and new category of cigars it has developed under its "mission to upgrade the world's cigar categories", on the basis of its succession to the century-old Maoda brand in keeping with its drive to develop the "light elegant aroma" category of cigars and in full understanding of the individualized demand by Chinese consumers for a new generation of cigar products.

Because Chinese smokers prefer smoking flue-cured type cigarettes, it would probably be difficult for them to get used to the strong flavor of traditional cigars made from air-cured or sun-cured tobacco when they have a first trial. Therefore, in light of the particular demand and smoking habit of Chinese smokers, technicians with CTHIC have succeeded in introducing a mild Chinese-style flue-cured type tobacco manufacturing technology into the formula for making cigars to somewhat neutralize the strong and thick tobacco flavor of traditional cigars. As a result, the cigar products made with this formula combine both hardness and softness of tobacco flavor. By means of rational combination of leaf tobacco from different regions and of different types, they have been striving to develop cigar products meeting the favor of Chinese smokers. On the basis of this, CTHIC has made even greater efforts to innovate technology and improve product quality in terms of aroma preservation, lowering the noise from smoking, moisture retention in packaging, etc in cigar production.

Meanwhile, CTHIC has been busy developing its series of cigar products, presenting three major series – the Landscape of Cigars, the Charm of Cigars and the Dream of Cigars series.

Xueyaxiang has a mellow and thick mouth feel and an aftertaste of lightness and elegance with effective prevention of odors from generic flue-cured type tobacco products and stimulation of Western-style cigars. The success in integrating the strong points of flue-cured type tobacco products and Western-style cigars and effective prevention of their weak points has eventually led to the development of Xueyaxiang as a brand new generation of cigars meeting the favor of Chinese smokers.

From naming to packaging, and from technology to technique, Xueyaxiang is in embodiment of the unique characteristics of cigars and takes on a typical Chinese style.

It is tenable to say that the birth of Xueyaxiang is a result of independent creation in conformity with the orientation of development of Chinese-style cigar products. In the blue sea area of development of domestic production of cigars, after the holding of the April 18 symposium on cigar marketing and with intensification of preparation by the tobacco industry, domestically-manufactured cigars are expected to undergo rapid development in the years to come. The newborn Xueyaxiang – in the capacity of a new generation and a new category of cigars with Chinese characteristics – will definitely lead the domestic production and marketing of cigar products into a new stage of development. Enditem