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China Research and Intelligence: Cigarette Yields in China Reached 2.2 Trillion in 2008 --China is the world’s largest tobacco production and consumption country. The tobacco industry occupies an important position in Chinese national economy, as the major financial revenue source of Chinese government. In 2008, Chinese tobacco industry accumulatively realized the industrial and commercial taxes of 449.9 billion Yuan (64.3 billion USD). Chinese tobacco industry is a controversial industry. On the one hand, the government monopoly tobacco industry brings huge profits for the government; on the other hand, the voice of smoking harmful to health is getting higher and higher.


China has about 400 million smokers, accounting for over 30% of total Chinese population and one fourth of the world’s smokers, 15 million of which are female. Besides, the smokers in China show the increasing tendency.


In 2008, China produced 2.2 trillion cigarettes, up by 3.7% year on year and sold 2.2044 trillion cigarettes, up by 3.1% year on year.


The market concentration of Chinese tobacco industry is gradually accelerating. The most cigarette brands in China were near to 2,400, which were 758 in 2002 and reduced to 582 in 2008. With the intensification of the cigarette brand integration in China, there were only 155 cigarette brands and 873 specifications in production by the end of 2008. In 2008, the yields of the top 20 cigarette brands accounted for 44.05% of the total cigarette yields and the sales revenues accounted for 61.22% of the total sales revenues.


In 2008, there were 13 brands exceeding the sales volumes of 50 billion cigarettes in Chinese market, holding the line compared with 2007. In 2008, only one brand Baisha exceeded the sales volumes of 100 billion cigarettes, which were only two in 2007 that was Hongmei and Baisha.


In 2008, the total sales volumes of the brands exceeding the 50 billion cigarettes passed 1 trillion cigarettes, reaching to 1.0395 trillion, accounting for about 47% of the total sales volumes in China (exclusive of the smuggling cigarette volumes). The concentration was further enhanced.


In 2008, among the 13 brands with the sales volumes exceeding 50 billion cigarettes, Qipilang of China Tobacco Fujian Industrial Corp. was the new member. In 2007, only Furong passed the sales volumes of 50 billion cigarettes, which was dropped in the sales volumes in 2008 and withdrew from 50 billion cigarettes club.


From the aspect of order changes, among the brands with the sales volumes exceeding 50 billion cigarettes, Hongtashan, the fastest increase speed, continued to keep fast development, increased from the original tenth place to the sixth place in 2008.


After Baisha having held the first place in sales volumes for successive years, Hongmei won the sales champion in 2007 and Hongmei returned to the first place in 2008.


Among the 13 brands with the sales volumes above 50 billion cigarettes, Hongtashan was the largest one in the growth rate compared to the same period. Due to the leading position of Hongtashan brand, it showed the explosive development in recent years and still kept fast development tendency in 2008, standing the sixth place since entry the top ten in 2007. The Hongqiqu brand was the second largest one in the growth rate compared to the same period and Qipilang followed behind.


However, among the brands with the sales volumes over 50 billion cigarettes, four brands were cut down in the sales volumes, including Hongmei, Huangguoshu, Hongshancha and Hademen.


The accumulative sales volumes of the cigarette brands with the sales volumes exceeding 50 billion cigarettes were increased by 10.13% compared with 2007.


As the international financial crisis brings increasing uncertainty to Chinese economy, it is uncertain about the influences on Chinese cigarette consumption market. If the general environment of the cigarette market is in bad tendency, the first stricken will hit the medium and high quality brands. The brand development scale will be restrained inevitably, exclusive the possibility of the reduction in the total cigarette sales volumes.


Source: China Research and Intelligence

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Eileen Gu