China's Tobacco Industry in Rapid Development of Low-Tar-Level Cigarette Products

Source from:  TobaccoChina Online 06/13/2011

The tobacco industry of China has been in rapid development of low-tar-level cigarette products since the State Tobacco Monopoly Administration (STMA) - the regulator of the tobacco industry - adopted in 2010 the General Program for Promoting Cigarette Production by the Tobacco Industry to A Higher Level. In adopting the general program, the STMA set the target of increasing the annual sales of low-tar-level cigarettes in China to 80 billion cigarettes (1.6 million cases) in 2011, which will double the annual sales volume in 2010. Since this target is unveiled, both the manufacturing and commercial sectors of the tobacco industry have further strengthened efforts to develop low-tar-level cigarette brands, leading to steady development of markets of low-tar-level cigarettes and rapid development of low-tar-level cigarette products in the first quarter of 2011. In the first three months, tobacco manufacturing enterprises across China, taking advantage of the favorable policy environment, all got involvement in the development of low-tar-level cigarette products. As a result, market supply of low-tar-level cigarette in China increased obviously, and competition at the marketplace of low-tar-level cigarettes turned increasingly intense. In the three-month period, the tobacco industry of China had 118 cigarette brands with 931 specifications in production, including 29 low-tar-level cigarette brands with 110 specifications. Meanwhile, the number of low-tar-level cigarette brands in sales in China totaled 37 with 122 specifications, including 10 imported low-tar-level cigarette brands with 25 specifications. The STMA approved 26 new cigarette products in this period, of which 15 are low-tar-level cigarette products. In the three months, the sales volume of low-tar-level cigarettes increased rapid to 43.45 billion cigarettes (869,000 cases), which is close to the annual sales volume of 44.3 billion cigarettes (886,000 cases) in the whole of 2010, with continued growth of single-case amount of sales income. The amount of low-tar-level cigarette sales income reached 23.21 billion yuan (3.57 billion U.S. dollars) in the first three months, already in excess of the total of 19.48 billion yuan (3 billion U.S. dollars) in the whole of 2010, with the single-case amount of sales income hitting 267 million yuan (41 million U.S. dollars), higher than the average level of 4,700 yuan (723 U.S. dollars) in 2010. In the first quarter, the commercial enterprises of the tobacco industry across China all strengthened efforts to introduce and promote the sales of low-tar-level cigarettes in their respective regions, with the market coverage of low-tar-level cigarettes continuing to expand. In the three-month period, the provincial-level markets across China each sold 41 specifications of low-tar-level cigarettes on the average, up 10 year-on-year, with low-tar-level cigarette products covering all prefecture- or city-level markets across China. In comparison, seven prefecture- or city-level markets in six Chinese provinces or provincial-level regions did not sell any low-tar-level cigarettes in 2010. In the first months of 2011, there were four Chinese provinces each registering a low-tar-level cigarette sales volume of 2.5 billion cigarettes (50,000 cases) - Hubei Province in central China, Jilin and Heilongjiang Provinces in northeast China, and Shandong Province in east China. Moreover, these four provinces saw their low-tar-level cigarette sales volume in the first three months exceed the total registered in the whole of 2010. Enditem