Smoking the competition

09:20, November 09, 2010      

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The nation's tobacco monopoly plans to cut the number of domestic cigarette brands to less than 20 by 2015, in a bid to compete with overseas rivals.

  That means China National Tobacco Corporation, which owns all domestic cigarette makers, will have to eliminate over 80 existing brands in just five short years.

  The plan is to pit two brands, Double Happiness and Hill of the Red Pagoda, up against the likes of Philip Morris brands Marlboro, Virginia Slims and Parliament.

  China National Tobacco said Monday on its website that its Qinghai branch will "cultivate" these famous brands.

  The goal is for each brand to sell up to 5 million cases annually by 2015. That's a lofty goal considering Double Happiness sold just 1.64 million cases last year and Hill of the Red Pagoda sold 2.17 million. The company expects sales from at least one of those two brands to top 100 billion yuan ($14.97 billion) a year.

  Additionally, the firm wants six total brands to bring in more than 60 billion yuan ($8.98 billion) each, and for a further six to each bring in 40 billion yuan ($5.95 billion).

  "Improving the competitive edge of the whole industry is our goal," Jiang Chenkang, head of the China National Tobacco Corporation, said earlier this year.

  According to the American Cancer Society, China National Tobacco controls 32 percent of the global cigarette market - almost as much as Philip Morris and British American Tobacco combined.

  Despite the fact that the Chinesetobacco industry handed over profits and taxes worth a whopping 513 billion yuan ($76.28 billion) to the State last year, not one domestic brand was able to compete with foreign giants on the global stage.

  Back in 2002, China National Tobacco merged many of the nation's 123 cigarette producers, drastically reducing the hundreds of brands flooding the market. The result was a 10 percent jump in sales for 30 percent of the producers.

  Han Liang, sales manager of a cigarette shop on Guanghua Road, told the Global Times Monday that he sells about one carton of Marlboros a month, compared with 40 to 50 cartons of Hill of the Red Pagoda.He sells Marlboro for 15 yuan ($2.23), compared with 7.5 yuan ($1.12) for Hill of the Red Pagoda. "Most consumers still prefer smokes under 10 yuan ($1.49) a pack."

Source: Global Times

(Editor:黄蓓蓓)

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