market research report :tobacco market in china 2012
DESCRIPTION
For the complete report, get in touch with us at : [email protected] The Tobacco Market in China is part of Netscribes’ Food & Beverage Industry Series reports. China is the largest cigarette producer and consumer in the world. The Chinese tobacco market is poised to witness phenomenal growth owing to rise in smokers’ population coupled with changing lifestyle and affordability. The report begins with the global tobacco market overview comprising the global market size and expected growth until 2012. The global cigarette production and consumption country-wise is also included along with the growth in global cigarette consumption. The global cigarette consumption pattern entails the share of male and female smokers in developed as well as developing countries worldwide. The domestic tobacco market overview provides details on the industry size in terms of tobacco sales and projected growth for the period 2010-15. This section includes the growth of cigarette consumption. The future growth prospect of Chinese tobacco industry is discussed in detail. This is followed by the share of total tobacco consumers and the share of smokers in the urban and rural population, specifying the share of overall smoking population, share of male smoking population and share of female smoking population for both urban and rural population. Also, mentions the share of smokers in the various age groups, specifying the share of overall smoking population, share of male smoking population and share of female smoking population for each age group. The segment for the price assessment of cigarettes sold in China has been provided in the report. Further, the important tobacco leaf producing provinces are mapped. The report provides detailed information about the exports and imports of tobacco products. It provides country-wise import and export for the year 2010. Import and export data provided are in value terms. Factors driving the growth of tobacco market in China include growing smokers’ population, accelerating urbanization and changing lifestyle, young smokers to drive cigarette sales and gift culture. Key players operating in the market also face challenges which are impeding their development and growth. Major challenges identified include increasing consumer awareness on health issues, rising medical costs and ban on smoking in public places and media advertising. The report also highlights the role of government in the country’s tobacco sector. It evaluates the steps taken by the government in view of consolidating the tobacco industry. The plan adopted by the government organization in order to enhance international competitiveness is also given. Further, an overview of various research and development initiatives undertaken by the government, particularly those for the ‘low-tar’ or ‘less harmful’ cigarettes are also discussed briefly. Emerging trends in the tobacco market include rising female smokers, growing popuTRANSCRIPT
Tobacco Market – China
February 2012
2TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
Executive Summary
Market
Drivers & Challenges
Competition
Tobacco industry plays a significant role in supporting the Chinese economy, contributing ~x% of the central government’s annual revenue Tobacco sales is expected to reach USD a bn in 20‐‐, growing at a CAGR of x1 % from b bn in 20‐‐
Trends
Rising Female Smokers
Growing Popularity of ‘Low‐Tar’ Cigarettes
Brand Promotion through Charity
Innovative Marketing Strategies
Strategies to Capture Health‐Concerned Consumers
Drivers:
‐ Growing Smokers’ Population
‐ Accelerating Urbanization and Changing Lifestyle
‐ Young Smokers to Drive Cigarette Sales
‐ Gift Culture
Government Initiatives
Role of the Government of China
Chinese Tobacco Industry – Major Contributor to the Revenues of Chinese Govt.
Industry Consolidation and Health Issues
“532” and “461” Plans
Research and Development
Challenges:
‐ Increasing Consumer Awareness on Health Issues
‐ Rising Medical Costs
‐ Nicotine Replacement Therapy
‐ Ban on Smoking in Public Places and Media Advertising
Company 4Company 2 Company 3Company 1
Major Players
3TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
•Market Overview
• Global
• China
•Export‐Import
•Drivers & Challenges
•Government Initiatives
•Trends
•Investment Opportunity
•Competition
•Key Takeaways
4TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
Developing nations provide good opportunity for growth of the tobacco industry globally
•Tobacco plays a major role in supporting various economies worldwide
Global tobacco market is expected to amount USD a2 bn in 20‐‐, growing at a CAGR of x % from USD a1 bn in 20‐‐
• Presently tobacco agriculture is prevalent in more than y countries covering ~z mn hectares of world’s agricultural land
• Two‐thirds of the world’s tobacco is collectively produced by Country 1, Country 3, Country 2 and Country 4
•Due to less stringent local regulations, Tobacco market of the developing nations is on the rise
• Developing countries account for p% of the global tobacco production with China maintaining its lead, accounting for q% of global tobacco production
Developing countries account for r% of the global tobacco exports while the remaining t% comes from the developed countries
Market Size and Growth
Major Tobacco Producing Nations
Global Tobacco Market – Overview (1/2)
Source:
b11%
b7%
b8%
b9%b10%
b6%b3%
b4%
b1%
b5%
b2%
Country 8
Country 9
Country 10
Rest of the world
Country 7
Country 5
Country 2
Country 6
Country 3
Country 4
Country 1
0
100
200
300
400
500
USD bn
20‐‐e
a2
20‐‐
a1
x%
5TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
Cigarette smoking is the most popular form of tobacco consumption worldwide
•Global cigarette consumption is expected to reach a4tr sticks by 20‐‐
Annual global cigarette sales is over x tr cigarettes with ~y mn cigarettes sold per minute
Worldwide daily cigarette consumption is ~z bn sticks
• Presently, the total global smoking population stands at an estimated p bn
According to WHO, global smoking population is estimated to grow at a CAGR of q% to r% during 20‐‐‐20‐‐
China is the world’s leading tobacco consumer, accounting for b1% of the global tobacco consumption followed by EU, India and Russia accounting for b2%, b3% and b4% respectively
• Currently, ~s bn men smoke, dominating the world’s total smoking population compared to around t mn female smokers
Global Cigarette Consumption
Global Tobacco Consumption (2010)
Global Tobacco Market – Overview (2/2)
Source:
x2%
x1%
Developed Country
y2%Female Smokers
y1%Male Smokers
Developing CountryGender
0
2,000
4,000
6,000
8,000
bn sticks
20‐‐
y%
a3a2
20‐‐e20‐‐
a1
b11%
b7%
b8%
b9%b10%
b6%b3%
b4%
b1%
b5%
b2%
Country 8
Country 9
Country 10
Rest of the world
Country 7
Country 5
Country 2
Country 6
Country 3
Country 4
Country 1
6TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
China is the largest cigarette producer and consumer in the world
• China is the world’s largest and fastest growing tobacco
market
• It has the world’s largest smoking population, more
than the total population of the U.S.
In 20‐‐, there were more than p mn smokers in China,
comprising a quarter of the world’s total smoking population
– Of this, more than q mn were women
Atleast one cigarette is smoked in China out of every three
cigarettes smoked worldwide
Tobacco sales is expected to reach USD a6 bn in 20‐‐, growing
at a CAGR of x % from USD a1 bn in 20‐‐
• In 20‐‐, Chinese smokers consumed b1 tr cigarettes
Cigarette consumption will amount to ~b6 tr sticks by 20‐‐,
with a CAGR of y % during 20‐‐ ‐20‐‐
Market Size and Growth
Growth of Cigarette Consumption
Domestic Tobacco Market – Overview
Source:
0
50
100
150
200
250
USD bn
x%
20‐‐e
a6
20‐‐e
a5
20‐‐e
a4
20‐‐e
a3
20‐‐e
a2
20‐‐
a1
0
1
2
3
20‐‐e
no. of sticks
b2
20‐‐
y%
20‐‐e
b6
20‐‐e
b5
20‐‐e
b4
20‐‐e
b3b1
7TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
Smoking Population in China (1/3)
Chinese Smokers – Region wise and Gender wise (2010)
Share of Total Tobacco Consumers
0%
20%
40%
60%
80%
100%
Female
b3%
a3%
Male
b2%
a2%
Overall
b1%
a1%
Urban Population Rural Population
0%
20%
40%
60%
80%
100%
Female
d3%
c3%
Male
d2%
c2%
Overall
d1%
c1%
0%
20%
40%
60%
80%
100%
Female
f3%
e3%
Male
f2%
e2%
Overall
f1%
e1%
Non‐Smokers
Smokers
Source:
8TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE Smoking Population in China (2/3)
Chinese Smokers – Age wise and Gender wise (2010)
Age Group 15 to 24 yrs
Age Group 45 to 64 yrs
Age Group 25 to 44 yrs
Age Group 65 +
0%
20%
40%
60%
80%
100%
Female
b3%
a3%
Male
b2%
a2%
Overall
b1%
a1%
Non‐Smokers
Smokers
0%
20%
40%
60%
80%
100%
Female
q3%
p3%
Male
q2%
p2%
Overall
q1%
p1%
0%
20%
40%
60%
80%
100%
Female
d3%
c3%
Male
d2%
c2%
Overall
d1%
c1%
0%
20%
40%
60%
80%
100%
Female
f3%
e3%
Male
f2%
e2%
Overall
f1%
e1%
Source:
9TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
Cheap cigarettes available in China contributes to very high level of smoking
Cigarette Price Assessment
•Cigarettes in China are cheaper compared to the international standards
• In Dec 20‐‐, the most popular cigarette brands in China were sold for ~USD x which is in
compliance with the Global Adult Tobacco Survey (GATS) results
According to GATS, y% of smokers spent USD x or less on 20 manufactured cigarettes
Price of 20 Piece Pack of Marlboro (20‐‐) – Country wise Comparison
0
5
10
15
USD
a4
Country 3
a3
Country 2
a2
Country 6Country 1
a6
a1
Country 5
a5
Country 4Source:
10TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
Tobacco leaf is produced throughout the country, making China the world’s largest producer of tobacco
Tobacco Leaf Hubs in China
•Out of x provinces in China, y provinces grow tobacco leaf
• In terms of both growing tobacco and cigarette manufacturing Province 1, Province 2, Province 3 and Province 4 are the most important provinces, together growing z % of the total tobacco leafs grown in China
Province 1
Province 2
Province 3
Province 4
Source:
11TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE Over the past five years, there has been a consistent trade surplus from the Chinese tobacco industry
Tobacco – Exports (HS Codes Value‐wise)
Tobacco – Imports (HS Codes Value‐wise)
c6%
c5%c4%
c3%
c2%
c1%
Others
Country 5
Country 4
Country 3
Country 2
Country 1
d6%d5%
d4%
d3%
d2% d1%Others
Country 5
Country 4
Country 3
Country 2
Country 1
Exports Country Split – 20‐‐
Imports Country Split – 20‐‐
Others
c6%
c65%
c64%
c63%c62%c61%
Region 5
Region 4
Region 3
Region 2
Region 1
0
200
400
600
800
1,000
1,200
USD mn
x%
20‐‐
a5
20‐‐
a4
20‐‐
a3
20‐‐
a2
20‐‐
a1
0
200
400
600
800
1,000
USD mn
20‐‐
b5
20‐‐
y%
b4
20‐‐
b3
20‐‐
b2
20‐‐
b1
Source:
12TOBACCO MARKET IN CHINA 2012.PPT
Drivers & Challenges – Summary
Accelerating Urbanization and Changing Lifestyle
Drivers
Growing Smokers’ Population
Young Smokers to Drive Cigarette Sales
Gift Culture
Nicotine Replacement Therapy
Rising Medical Costs
Increasing Consumer Awareness on Smoking Related Health Issues
Challenges
Ban on Smoking in Public Places and Media Advertising
13TOBACCO MARKET IN CHINA 2012.PPT
Impact
Increasing population has augmented the domestic demand for cigarettes
Growing Smokers’ Population
• Finding 1
• Finding 2
• Finding 3 Sub‐finding 2
Rise in Total Population
0
500
1,000
1,500
x%mn
20‐‐e
a4
20‐‐e
a3
20‐‐
a2
20‐‐
a1
m2% m1%
Non-SmokersSmokers
f2%
f1%
Male Female
Point 1
Consumer Base in 20‐‐ Comparison of Female Smokers – 20‐‐
0
5
10
15
20
Country 2
b2
Country 1
b1
%
Source:
14TOBACCO MARKET IN CHINA 2012.PPT
Accelerating urbanization coupled with changing lifestyle boosts cigarette sales
Accelerating Urbanization and Changing Lifestyle Impact
Sales of Grade 1 Cigarette
• Finding 2
Sub‐Finding 1
Sub‐Finding 2
Smoking high end cigarettes or cigars are often considered as the symbol of wealth by the affluent class
• Finding 1
Increasing Rate of Urbanization Per Capita Urban Disposable Income
0
500
1,000
1,500
2,000 c2
Jan‐Jun 20‐‐
c1
USD
Jan‐Jun 20‐‐
y%
Urbanization Rate (RHS)Urban population
0
200
400
600
800
0
20
40
60
% mn a4a2
x%
20‐‐e
b2b4
20‐‐ 20‐‐e
a3a1 b3
20‐‐
b1
0
100
200
300
400
500z%
20‐‐e
d3
20‐‐
mn
20‐‐
d2
d1
Source:
15TOBACCO MARKET IN CHINA 2012.PPT
Impact
Share of Young Population in Total Population (20‐‐)
Young Chinese smokers add to the rising sales of cigarettes in the country
Young Smokers to Drive Cigarette Sales
Point 1
a3%
a2%
a1%
> 19 yrs
10 yrs to 19 yrs
< 9 yrs
~x mn young potential smokers
• Result 1Under 18
ResultsAge
• Result 2
• Result 3• Result 4
13 to 19 yrs
20‐‐ China Tobacco Control Study
• Result 5• Result 6
Elementary and high school students
ResultsCategory
Result 7
Survey by Peoples Daily
• Finding 1 Sub‐Finding 1
Sub‐Finding 2
Sub‐Finding 3
Source:
16TOBACCO MARKET IN CHINA 2012.PPT
Impact
Avg. Deaths Resulting from Tobacco Related Diseases
Rising health concerns in consumers and growing awareness impedes the future prospects of the tobacco sector
Increasing Consumer Awareness on Smoking Related Health Issues
0
1
2
3
4
mn
q%
b1
20‐‐e
b2
20‐‐
Deaths Due to Cancer (20‐‐)
Lung cancer cases increased x% since 19‐‐
Equivalent to y % of all tobacco related deaths
in the world
Finding 3– Sub‐finding 4
a2%
a1%Other Forms of Cancer
Lung Cancer
• Finding 1 Sub‐finding 1
– Sub‐finding 2
• Finding 2 Sub finding 3
Source:
17TOBACCO MARKET IN CHINA 2012.PPT
Chinese tobacco industry contributes to a large proportion of the government revenue
•Finding 1
Sub‐finding 1
Sub‐finding 2
• Finding 2
Chinese Tobacco Industry – High Source of Revenue
Rise in Tax Paid by CNTC Rise in Profits Shared by CNTC
0
50
100
150
USD bn
x%
a1
20‐‐
a3
20‐‐
a2
20‐‐0
20
40
60
80
100
20‐‐
b3%
20‐‐
b2%b1%
y%
20‐‐
USD bn
Source:
18TOBACCO MARKET IN CHINA 2012.PPT
Consolidation of the tobacco industry has been achieved by continuous restructuring of the sector
•Finding 1 Sub‐finding 1
Sub‐finding 2
Decline in No. of Cigarette Brands Decline in No. of Tobacco Companies
Industry Consolidation and Health Issues
0
500
1,000
1,500
no.
a1x%
20‐‐
a2
20‐‐0
50
100
150
200
no.
b1y%
20‐‐
b2
20‐‐
Source:
19TOBACCO MARKET IN CHINA 2012.PPT
The “532” and “461” plans are adopted by the government in view of augmenting international competitiveness
•Finding 1
“532” and “461” Plans
“532” Plan“532” Plan
“461” Plan
• Finding 1
Sub‐finding 1
Sub‐finding 2
x1
x2
x3
y1
y2
y3
No. of Brands
To Generate
Source:
20TOBACCO MARKET IN CHINA 2012.PPT
Trends – Summary
Rising Female Smokers
Innovative Marketing StrategiesBrand Promotion Through
Charity
Growing Popularity of ‘Low‐Tar’ Cigarettes
Strategies to Capture Health‐Concerned Consumers
Key
Trends
21TOBACCO MARKET IN CHINA 2012.PPT
Annual sales volume of ‘low‐tar’ cigarettes in China is expected to reach z bn sticks by 20‐‐
Growing Popularity of ‘Low‐Tar’ Cigarettes
Sharp increase in the output and sales of ‘low‐tar’
cigarettes
Annual Sales Volume *
0
200
400a4
bn
T%
20‐‐e20‐‐e
a3
20‐‐
a2
20‐‐
a1
No. of cigarettes
Competition Scenario
• Finding 3
Jan – Jun 20‐‐
y4 %x4 bnSales Volume
y3 %x3 bnOutputKey ‘low‐tar’cigarette brands
Share in Total ‘Low‐Tar’ CigaretteNo. of Cigarettes
Tar level of 8mg per cigarette or
lower
Category
x2 mn
x1 mn
No. of Cases
y1 % Output
Y‐O‐Y Growth
y2 % Sales Volume
• Finding 1 Sub‐finding 1
Source:
22TOBACCO MARKET IN CHINA 2012.PPT
All along the tobacco value chain, there are essentially two products that allow the investors to gain industry exposure
Packaging Flavoring
Value Addition
• Finding 6• Finding 7• Finding 8
Important Companies
• Company 1
• Company 2
• Company 3
• Company 4
Value Addition
• Finding 9• Sub‐finding 1• Sub‐finding 2• Sub‐finding 3
Important Companies
• Company 5
• Company 6
Finding 4 Finding 5
Investment Opportunity
•Finding 1
•Finding 2
•Finding 3
Source:
23TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
Domestic Company – Company 1
Key People
Products and Services
Company Information Locations – China
Corporate AddressCompany 1
No. x, y Road, City 1, Province 1, Pin code China
Tel No. ‐
Fax No. ‐
Website ‐
Year of Incorporation 19‐‐
Category Products/Services
Tobacco products Product 1, Product 2, Product 3, Product 4 and Product 5
Vice DirectorPerson 4
Name Designation
Person 1 President
Person 2 Discipline Inspection Head
Person 3 Director
Source:
24TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE
Description News
Overview
• Company 1 is the largest single manufacturer of tobacco products in the world
• Company 1 falls under the authority of the organization 1, organization responsible for enforcing the tobacco monopoly in Country 1
At present, ~x domestic tobacco companies operate as a subsidiary of the government owned company 1
Strategic alliances• In Dec 20‐‐, Company 2 laid the foundation of a new plant in location 1, country 1 and it is estimated to generate y metric tons of acetate tow on its completion, which will be operated by Company 3, a partnership firm with Company 1
Overseas expansion
• Company 1 is likely to adopt three main strategies to expand into the international market and enhance foreign competitiveness of Chinese brands
1. Strategy 1
2. Strategy 2
3. Strategy 3
• Company 1 plans to invest USD z mn for the development of Company 4, which in turn will contribute to company 4’s efforts to develop markets in Eastern Europe
Key Recent Developments
Domestic Company – Company 1
Source:
25TOBACCO MARKET IN CHINA 2012.PPT
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
0 5 10 15 20 25 30 35 40 45 50 55 60
Net Income
Revenue
m3
m2
m1
Public Companies – Summary
Size of the Bubble represents Market Capitalization in USD bn
Company 3Company 1 Company 2
Source:
26TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE Foreign Company – Company 2
Key People
Products and Services
Company Information Locations – China
yyyyStock Exchange
Corporate AddressCompany 2
x, y Avenue, City 2, City 2 Pin‐code, Country 2
Tel No. xxx‐yyy‐zzz
Fax No. ‐
Website ‐
Year of Incorporation 19‐‐
Ticker Symbol xx
Type 4, Type 5, Type 6Other Tobacco Products
Type 1, Type 2, Type 3Tobacco
Processing of the tobacco leaf, production of the cigarettes and packaging and preparation for distribution
Cigarette Production
Category Products/Services
Cigarettes Brand 1, Brand 2, Brand 3, Brand 4, Brand 5, Brand 6, Brand 7, Brand 8, Brand 9, Brand 10
Name Designation
Person 1 CEO
Person 2 Chief Financial Officer
Person 3 Chief Operating Officer
Person 4 Senior Vice President
Source:
27TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE Financial Snapshot Key Ratios
Financial Summary
Foreign Company – Company 2
• The company incurred a net profit of USD x1 bn in FY 20‐‐, as compared to net profit of USD x2 bn in FY ‐‐
• The company reported total Income of USD x3 bn in FY 20‐‐, registering an increase of x4% over FY 20‐‐
• The company earned an operating margin of x5% in FY 20‐‐ an increase of x6 percentage points over FY 20‐‐
• The company reported debt to equity ratio of x7 in FY 20‐‐, an increase of x8%over FY 20‐‐
Financial Summary
Revenue
Profit / Loss
0
10
20
30
0
2
4
6
8
2007
a1
ProfitUSD bn
RevenueUSD bn
20102009
a4a3
2008
a2
Indicators Value (05/01/2012)Market Capitalization (USD) y1 bnTotal Enterprise Value (USD) y2 bnEPS (USD) y3PE Ratio (Absolute) y4
Particulars y‐o‐y
change (20‐‐‐‐‐)
20‐‐ 20‐‐ 20‐‐ 20‐‐
Profitability RatiosOperating Margin ‐ ‐ ‐ ‐ ‐
Net Margin ‐ ‐ ‐ ‐ ‐
Profit Before Tax Margin ‐ ‐ ‐ ‐ ‐
Return on Equity ‐ ‐ ‐ ‐ ‐
Return on Capital Employed ‐ ‐ ‐ ‐ ‐
Return on Working Capital ‐ ‐ ‐ ‐ ‐
Return on Assets ‐ ‐ ‐ ‐ ‐
Return on Fixed Assets ‐ ‐ ‐ ‐ ‐
Cost RatiosOperating costs (% of Sales) ‐ ‐ ‐ ‐ ‐Administration costs (% of Sales)
‐ ‐ ‐ ‐ ‐
Interest costs (% of Sales) ‐ ‐ ‐ ‐ ‐
Liquidity RatiosCurrent Ratio ‐ ‐ ‐ ‐ ‐Cash Ratio ‐ ‐ ‐ ‐ ‐
Leverage RatiosDebt to Equity Ratio ‐ ‐ ‐ ‐ ‐
Debt to Capital Ratio ‐ ‐ ‐ ‐ ‐
Interest Coverage Ratio ‐ ‐ ‐ ‐ ‐
Efficiency RatiosFixed Asset Turnover ‐ ‐ ‐ ‐ ‐Asset Turnover ‐ ‐ ‐ ‐ ‐Current Asset Turnover ‐ ‐ ‐ ‐ ‐Working Capital Turnover ‐ ‐ ‐ ‐ ‐
Capital Employed Turnover ‐ ‐ ‐ ‐ ‐
Improved DeclineSource:
28TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE Key Business Segments Key Geographic Segments
Foreign Company – Company 2
Key Recent Developments
Description News
Overview• Company 2, through its subsidiaries manufactures and sells cigarettes and other tobacco products in x countries, via y production facilities in z different countries and produces over w bn cigarettes per annum
Strategic alliances• In 20‐‐, Company 1 started the production and distribution of ‘Brand 1’ cigarettes in Country 1, in exchange of a 50‐50 JV between Company 2 and Company 3, which would support the overseas expansion of Chinese brands
Executive/Board changes• In Apr 20‐‐, Person 1, chief financial officer of Company 4, was appointed as the independent director of Company 2, with the hope that the new director could act as a channel to expand sales in Country 1
0%
50%
100%x%
20‐‐Cigarettes and Other Tobacco Products
Point 1
27% 28%
0%
50%
100%
2010
11%28%
34%
2009
11%26%
36%
European Union
Eastern Europe, Middle East & Africa Region
Asia
Latin America and Canada
Source:
29TOBACCO MARKET IN CHINA 2012.PPT
•Market Overview
•Export‐Import
•Drivers & Challenges
•Government Initiatives
• Trends
•Investment Opportunity
•Competition
•Key Takeaways
30TOBACCO MARKET IN CHINA 2012.PPT
SAMPLE China, with x mn smokers accounting for more than y% of global total, has the world’s largest tobacco industry
Tobacco industry has become a leading industry in China's national economy and is playing a guiding and supporting role in the overall national economic situation
Growing population of
smokers and young consumer
base act as a driver for the
growing demand of cigarettes
in the country
Opportunities in the Market
Market SizeGovernment Initiatives
Challenges
Government plays the dual role of both the producer and regulator of the Chinese tobacco industry
Accelerating urbanization
coupled with changing
lifestyle, resulting in daily
consumption of cigarettes,
catalyzes growth of the
tobacco sector
Players are exploiting the
Chinese gift giving culture
which further boosts the
tobacco market in China
• Increasing Consumer Awareness on Health Issues
• Rising Medical Costs
• Nicotine Replacement Therapy
• Ban on Smoking in Public Places and Media Advertising
Taxes from tobacco industry is a major source of revenue for the government and it has adopted the “532”and “461” five year strategy in order to enhance international competitiveness of the domestic brands
Research and development ‘low‐tar’cigarettes is one of the major government’s strategies
0
100
200
300
a1
20‐‐
a2
20‐‐e
a3
20‐‐e
x%a5
20‐‐e
a4
USD bn
20‐‐e 20‐‐e
a6
31TOBACCO MARKET IN CHINA 2012.PPT
Thank you for the attention
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