Issue link: https://read.dmtmag.com/i/1541387
70 tobaccoasia Issue 6, 2025 November / December As competition for shelf space in convenience stores in first- and second-tier cities reaches a fever pitch with every inch being fiercely contested, where can the tobacco industry find its next trillion-yuan growth opportunity? The answer lies in the vast lower-tier markets – encompassing third-tier cities and below, counties, towns, and rural areas. Data from the National Bureau of Statistics shows that the population in these markets accounts for approximately 70% of the na- tional total, and their disposable income growth rate has consistently outpaced that of first- and second-tier cities in recent years. This once-overlooked "new blue ocean" has now become a strategic imperative for tobac- co brands. However, lower-tier markets are not simply synonymous with "low-price markets." Their unique demographic structures, consumption habits, and social ecosystems require brands to truly understand their "character" to win this "battle at the doorstep." Let's use Baoding City in Hebei Province as a case study to explore the evolving trajectory of the tobacco consumption market in these areas. Decoding the "character" of tobacco consumption in lower-tier markets As a typical city influenced by the Beijing-Tianjin-Hebei coordinated development and the con- struction of the Xiong'an New Area, Baoding's population base, consumption potential, and market characteristics accurately reflect common patterns seen in lower-tier markets nationwide. The delicate balance between price and perceived value Consumers in lower-tier markets exhibit high price sensitivity, but this does not equate to a pure pursuit of the lowest price. In the Baoding market, for instance, the mainstream cigarette price range is concentrated between RMB10-20. Within this range, Diamond (Soft Green) consis- tently tops sales charts due to its reliable quality and affordable price. This reflects the unique value orientation of these consumers: they seek a precise balance between brand reputation, taste experience, and cost. Winning the Battle for Lower-Tier Markets in China In lower-tier markets, tobacco use ties closely to social scenarios, with internet access driving younger consumers' demand for more personalized experiences. By Allen Liao