Tobacco Asia

Tobacco Asia 41 still collectively going "upward". When the main- stream consumption price range of cigarettes was beyond RMB200/carton in 2019, the range from RMB200-400/carton was constantly expanding, becoming the most crowded price range. The best-selling cigarettes have also shifted from con- ventional cigarettes to increasingly exquisite slim cigarettes, capsule cigarettes, and those with vari- ous filters. Cigarette consumption is becoming in- creasingly diversified, and consumers' demand for innovation is also increasing. Due to the price range of RMB200-300/ carton has become very common, the "reasonable price + excellent quality" price range of RMB400- 600/carton is gradually showing great potential. This price range has both scale potential and can better support new technologies and experiences, new needs, and trends. Therefore, many high-end brands like Yellow Crane Tower, Huangshan, Yuxi, Yunyan, Liqun, and Zhonghwa go in for investing in new products in this price range, receiving good market feedback. Greatly improved in culture and quality Although the middle-income group has a decent income, it does not mean they pursue luxury in their consumption. Due to their good cultural literacy, they pay more attention to the internal cultivation and details of products. The decisive factor in choosing a product is not the price, but the combined effect of various factors such as quality, sentiment, philosophy, culture, brand, and experience. They are willing to pay a higher price for products that meet their material and spiritual needs. Therefore, products featuring high technol- ogy and elegant cultural style are highly favored, which greatly promote the dual improvement of culture and quality of high-end cigarettes. In order to adapt to market demand, many cigarette companies under China National Tobac- co Corporation (CNTC) generally optimize and upgrade innovative methods to prioritize the ap- plication in high-end products. When it comes to technological innovation, the Chinese cigarette industry has continuously applied some advanced technologies to product practice and received good market feedback. For instance, China Tobacco (Yunnan) Industrial Cor- poration pioneered the non-burn flavoring theory, sparking a revolution in cigarette flavoring, and applied it in the Dazhongjiu brand. China Tobacco (Anhui) extracts Huoshan Dendrobium and enables it to be the core feature of the Huangshan brand, promoting its rapid development in recent years. Other examples include Nanjing (Yuhuashi, 3mg) which set a new milestone for Chinese slim ciga- rettes with ultra-low tar; Yellow Crane Tower (Win- dow) which pioneered a triad, transparent hollow filter with vortex fragrance that physically regu- lates the scent in different stages along with a small window on the cigarette embodying a futuristic sense of technology; and Yunyan (Black Diamond Impression) which pioneered the black-gold color combination, starting a new trend in elevating in- dustrial design to modern minimalist aesthetics. The above three products made technological in- novations in quality that meet the preferences of the middle-income group in terms of cigarette harm reduction, flavoring technology, and packing aesthetics. The following seven high-end cigarette brands of Chunghwa, Liqun, Lotus, Yellow Crane Tower, Furong King, Kuanzhai, and Nanjing have achieved the most market growth by enhancing cultural quality and stimulating emotional reso- nance. The luxurious Chunghwa, elegant and no- ble Lotus, calm and cool Liqun, and the refined style of Yellow Crane Tower all highly align with the spiritual world of the middle-income group at the cultural level. Overall, with the development of the econ- omy, the middle-income group is still expanding, so as their consumption ability and intention. Ac- cording to national statistics data, it is expected that the proportion of middle-income group will exceed 50% by 2030, contributing nearly 80% of the overall consumption of residents, and becom- ing the main force of consumption. This indicates that China's high-end consumption momentum is still strong. For a long time to come, how to inno- vate and enrich cigarette products in the high-end market and continuing to improve the quality of Chinese cigarette brands will be an important issue faced by the Chinese tobacco industry. The high-end cigarette segment continues to grow with demand also growing for innovative products. [China's middle class] has reached 400 million, accounting for nearly one-third of the total population and nearly 50% of the total consumption proportion.

• Cover