Tobacco Asia

16 tobaccoasia / Issue 1, 2017 March / April By TobaccoChina Online For the Chinese tobacco industry, 2016 was a pe- riod full of hardships. In that year, the industry met unprecedented challenges with cigarette sales declining and inventories remaining high. Some leading competitive brands registered plummeting sales, which dealt severe blows to the entire in- dustry. The industry has entered a "frigid winter", previously unseen at least over the past decade. In face of the hard time, manufacturing enter- prises remain quite enthusiastic and active in inno- vation. Over the past 10 months, all major tobacco companies presented newly-developed cigarette products including bursting bead cigarettes, slim cigarettes, electronic athletics cigarettes, and mak- ers cigarettes while others have chosen to offer regional customization, reintroducing brands, and integrating cigarette sales with liquor marketing. In short, they have each brought their unique ad- vantages into play to innovate and develop new products. But regrettably, neither the development of new products nor the adoption of new approaches has generated much value. For example, in the first three quarters of 2016, tobacco manufacturers na- tionwide presented to the market 178 new speci- fications of cigarette products covered by their 47 brands, with just 10 registering a sales volume at or above 10,000 cases (500 million cigarettes) and with more than 100 registering a sales volume of less than 1,000 cases. In face of such a situation, one could not help but ask: In the "frigid winter", is the zeal of the tobacco manufacturers to develop new products meant to re- cover their lost sales or are they futile efforts? At a time when old products cannot maintain existing market shares, presentation of new prod- ucts to the market is but a helpless choice, which makes new product development bear excessive high development expectation and pressure on growth. On the one hand, under high pressure, market operation tends to become abnormal, and execution of operation may become rash and too fast. It is just like building a skyscraper on a shaky foundation. On the other hand, under high expec- tations, there will be insufficient tenacity. Usually, any development of new products requires an in- dispensable process, which can be undergone after appropriate adjustment and persistence. Rashness in the development of new products under exces- sively high pressure will normally lead to failure and the whole process will have to be restarted. Moreover, as a result of an unfavorable market environment and target pressure, the commercial sector in tobacco lacks the driving force and even vigor for new product development. Although the aforesaid new products developed are different Recovering From a "Frigid Winter" China's tobacco industry needs to be persistent to innovate and develop new products to recover lost sales over the past year stemming from sluggish economic performance nationwide. Three development status of new cigarette products What role do manufacturers play by developing new products? Further development momentum Basically nobody cares Potential chances but without effective maintenance New Cigarette Products Recover lost sales Make futile efforts ?

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