China's Tobacco Industry Initially Forms "461" Brands Development Strategy

Source from:  TobaccoChina Online 01/24/2011

The tobacco industry of China, as a result of intensification of efforts to greatly promote the development of big competitive cigarette brands over the past year, has initially given form to a keynote brands development strategy, known as the "461" brands development strategy, with key tobacco manufacturers in the country all getting good report cards in this endeavor. In a work report delivered at the 2010 national tobacco work conference held in Beijing, Director-General Jiang Chengkang of the State Tobacco Monopoly Administration (STMA), for the first time ever, put forward the "532" and "461" brands development strategies. The "532" development strategy provides that in a period of five years or longer, efforts will be intensified to develop two well-known cigarette brands each with an annual output of 5 million cases (250 billion cigarettes), three each with an annual output of 3 million cases (150 billion cigarettes) and five each with an annual output of 2 million cases (100 billion cigarettes). And, the "461" development strategy provides that by the year 2015, efforts will be intensified to develop 12 highly influential cigarette brands each capable of generating over 40 billion yuan (5.9 billion U.S. dollars) in annual sales income, including six each capable of generating over 60 billion yuan (8.8 billion U.S. dollars) in annual sales income, and one capable of generating 100 billion yuan (14.8 billion U.S. dollars) in annual sales income. In 2010, a total of 15 Chinese cigarette brands registered over 20 billion yuan (2.95 billion U.S. dollars) in annual commercial wholesale income. In particular, Chunghwa registered 73 billion yuan (10.8 billion U.S. dollars) in annual sales income while Furongwang, Mount Hongtashan, Liqun and Baisha each over 40 billion yuan (5.9 billion U.S. dollars). Therefore, the "461" brands development strategy had taken its initial shape by the end of 2010. The 2010 statistics showed that key cigarette brands made obviously greater contributions to the development of the tobacco industry in the year. For the tobacco industry, a comprehensive test of the brands development capacity will eventually be whether its development of competitive brands will be systematically promoted to a higher level. Over recent years, Chinese cigarette brands have undergone fundamental changes, from free development of all brands to competitive development of hundreds of brands, and from the development of competitive brands to the formation of 20 leading competitive cigarette brands. As a result of market selection over the past few decades, Chinese cigarette brands are obviously in a trend of concentration onto big competitive brand families, whose competitiveness has kept increasing. Meanwhile, big cigarette brands are turning increasingly competitive. From the designation of Top 100 cigarette brands to the selection of two dozens big cigarette brand families, and from the formulation of a plan for developing 20+10 key cigarette brands to the initiation of the "532" and "461" brands development strategies, Chinese cigarette brands have been in a trend of becoming increasingly competitive from mere largeness in scope. Enditem