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Tobacco in China

China tobacco market to witness steady growth between 2012 and 2017

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2014-03-25 03:37:04 - Tobacco in China - a new market research report on

Along with the overall improvement of Chinese consumers? disposable incomes, the pursuit of high-quality lifestyles and high-end products witnessed intense growth in 2011. Meanwhile, the adjustment of ad valorem excise tax in 2009 heavily squeezed the profits of economy tobacco brands; hence mid-priced and premium brands were considered as the main strategic focus of companies. As a result, supported by the government and the STMA (State Tobacco Monopoly Association), more endeavours were made in terms of mid-priced and premium brands by tobacco manufacturers than on economy brands.

A reduction in the tar content was highlighted as the major trend in tobacco in China in the review period. Following the tar level target announced by the STMA in early 2010, in May



2012 the government regulated that it would be illegal to sell cigarettes with a tar content higher than 11mg per stick in China from the beginning of 2013. In response to such consecutive tar content restrictions, most tobacco manufacturers made heavy investment in research and development into low tar brands, which brought about dozens of new launches with a lower tar content over the review period. By the end of the review period, considerable progress had been achieved in terms of reducing the tar level in cigarettes. According to the STMA, the average tar level was 13.6mg, 12.2mg and 11.9mg in 2004, 2009 and 2010 respectively. However, in 2011 it reduced to 11.5mg. Furthermore, given the tar level targets set by the STMA, further progress is expected to be seen over the forecast period.

During the review period, the restructuring and integration of China?s tobacco industry steadily continued. Supported and supervised by the government and the STMA, leading tobacco companies in China made persistent efforts in terms of product quality control and research and development, with the aim of strengthening brand image and improving market penetration. As awareness of the leading brands amongst domestic smokers has gradually been enhanced, consolidation in tobacco was reinforced in 2011.

Tobacco in China is expected to record a steady volume increase during the next five years. Although several smoking control regulations have been implemented by the government, such as public smoking bans, they are not forecast to have much impact on the volume consumption of tobacco. Meanwhile, the price rises brought about by ad valorem excise tax adjustments are not expected to affect domestic smokers? consumption of tobacco products.

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Mike King
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