Currently, Chinese people pay RMB2.2bn for 370 million cigars every year, among which low-end market accounts 200 million, with the price per cigar of RMB0.3 or below; while 170 million real-sense cigars are sold, delivering a sales amount of RMB2.1bn. As for market shares, top-end cigars account for 25%, mid-priced 30%, and low-end 45%, which are different
from those in European and American countries, where the proportion of mid- to top-end cigars is close to 50%:50%, and almost without low-end cigars.
Figure: Structure of Cigar Consumption in China
Cigars sold in China mainly fall into two categories, i.e. handmade and machine-made. The former are the traditional cigars totally made by hand. They are more expensive, and are really cigars. The latter, on the other hand, are from massive production with machines. They look more like common cigarettes, and have lowered barriers to entry the industry.
It is the market situation now that China's mid- and top-end cigar markets are mainly dominated by foreign cigars that have entered China through illegal channels. Incomplete data show that in Shenzhen, Guangzhou and Zhuhai the above-said foreign cigars account for 90% of the local cigar markets. As for China's homegrown cigar makers, they pay their major attention on low-end market, with people of mid and low incomes as the targets, for which the main reason is that the tobacco for China's home producers to make cigars is from China itself, and the taste is not so good. As a result, the finished products are not superior. Currently China's homegrown cigar makers mainly include Chuanyu Tobacco Corporation, Wuhan Tobacco, Anhui Tobacco, Shandong Tobacco etc, with Great Wall, Lion, Maoda, and Three Gorges as the major brands.
Friday, November 07, 2008