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Chinese cigars havebeen seeing growingpopularity in thedomestic market.
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Restrictions on travel and the importation of cigars due tothe Covid-19 pandemic have proved to be a boon forChinese cigars.
By TobaccoChina Online
Since the 2020 Covid-19 pandemic began, preventing its spread became the most urgent task all over the world. Many countries took various measures leading to an unprecedented crisis for many industries, including the cigar industry. However, China’s cigar manufacturers have been industriously working on various developments leading to significant growth.
Great Wall Cigars bucks the trend
Risks and opportunities always coexist. Domestic cigars seized the opportunity to find ways to increase the access and expand the influence of private brands among customers when the market was in short supply. In the first 10 months of 2020, the annual commercial sales volume of Great Wall handmade cigars exceeded a record 5 million, a historic breakthrough in China. Confronted by such a severe market economic situation, the following attempts have led to Great Wall Cigars, a division of China Tobacco (Sichuan) Industrial, achieving remarkable growth, besides maintaining its technical excellence.
In order to meet the needs of young consumers, Great Wall put a lot of younger elements into product design. For example, the new Caribbean Sunshine handmade cigar shows an eye-catching, fashionable appearance; a convenient design resembling a mobile phone making it easy for users to carry around in their pockets; and a pleasant smoking experience. Particularly, the price of RMB100 per box (four cigarettes/box) makes it definitely the first choice for young people, compared to other cigars priced at hundreds of yuan.
Digital transformation
During the Covid-19 situation, Great Wall Cigars regularly livestreamed cigar activities. For instance, a short video integrating knowledge dissemination and brand communication is very popular among cigar customers. Their official WeChat account continues to conduct theme activities and promoting hot topics, as well as online and offline interaction to attract more fans.
The traceability system based on blockchain technology developed by Great Wall and Alibaba combines technology with traditional handmade cigars so that cigars can be traced from planting to production to sales in order to promote the transformation of the “Internet plus” tobacco industry. Additionally, in October 2020, China Tobacco (Sichuan) and China Mobile (Sichuan) established a 5G+ innovation lab to promote the innovation and integration of 5G technology in the fields of smart manufacturing, smart warehousing, and smart logistics.
In addition to the online marketing mode, Great Wall Cigar also carries out offline activities to explore interesting, fresh, and elegant influential cigars for cigar customers. At present, it has covered the cities of Chengdu and Shenzhen, with more interesting cigar bars expected to be established in the future.
Great Wall Cigar Festival
Thanks to the effective prevention and control of the pandemic in China, the largest cigar festival in China, the Great Wall Cigar Festival was held last November 5-8, in the “Hometown of Chinese cigars” – Shifang city, Sichuan province. Six hundred guests gathered on site with more than 1,000 people participating from sub-venues in more than 100 cities across the country as well as more than 23,000 cigar customers watching the livestream. The festival included activities such as a forum, Chinese cigars tasting, and the release of limited-edition cigars.
As one of the highlights of the festival, the first “Great Wall Cigar International Academic Forum” was held, adopting both online and offline formats. Over 120 guests, including academicians and experts from universities and scientific research institutions in China, the UK, and Dominica; well-known figures in the cigar industry; as well as representatives of industrial and commercial tobacco companies gathered together to exchange ideas and information. The forum focused on technical research, latest advances, and hot application issues in the field of cigars, with a theme of cigar, flavor, fermentation, and pipe (pipe tobacco).
Internet + cigars
Domestic cigars should strengthen brand marketing. Therefore, China Tobacco (Hubei) Industrial uses the idea of “Internet plus cigars” to develop marketing strategies for its brand of Yellow Crane Tower cigars through film and television.
Yellow Crane Tower also cooperates with famous car, wine, golf, and other high-end brands to carry out experience marketing activities for consumer groups. As of October 2020, more than 240 cigar tasting activities had been held in the country. Cigar customers would be invited to participate in these activities to train them on how to smoke and select cigars, so as to help them establish an idea that cigars represent a kind of tasteful lifestyle.
Creating a cigar culture
China Tobacco (Shandong) Industrial and China Tobacco (Jinan) Commercial focused on promoting the construction of special store counters while jointly selecting retail customers to build cigar bars. They created a number of cigar flagship stores, cigar display stores, and other characteristic terminals to create a cultural atmosphere of cigars. Moreover, in combination with the consumption characteristics of high-end cigars, China Tobacco (Shandong) has taken the initiative to hold tasting meetings with high-end motorcycles brands, entrepreneur clubs, golf clubs, and other social circles to disseminate a cigar culture and promote its cigar brands.
Through continuous efforts, China Tobacco (Shandong) connected products and consumers to push forward the dissemination of a cigar brand culture and receive feedback from consumers. From the first quarter to the third quarter of 2020, the sales of domestic cigars in the Jinan market reached 3.0914 million cigars, a year-on-year increase of 142.5%. Among them, 542,300 cigars were from China Tobacco (Shandong), with a year-on-year increase up to 472.05%.
Domestic cigars usher in the spring of development
China’s domestic cigar retail industry suffered the impact of the pandemic at different degrees. Most of the cigar bars in Beijing said their sales fell sharply compared with the same period in previous years. This was due to the shortening of business hours and the decrease of customer flow due to the health crisis, as well as the sharp rise in the price of Cuban cigars. Some old cigar customers said that they could not afford the cigars and reduced purchases.
However, some old cigar stores said that the impact was not big. The owner of a cigar store along Chang’an Street in Beijing said that although the outbreak affected business hours, it had no impact on overall sales. “We had the worst sales in February and March, rebounded in June, and realized strong sales in July and August, many of which were large orders. Our sales data this year have been in line with the same period last year,” the boss revealed. He added that old stores had a great relationship with major customers, and they had done a lot of cultural publicity and public relations work.
The pandemic restricted the importation of cigars and international travel, and cigar lovers were unable to purchase cigars abroad, so the source of goods was limited to just one source. That is to say, domestic cigars have begun to attract attention as a new consumption trend. The owner of a cigar bar located in Shijingshan district of Beijing also confirmed to a cigar news agency that by the end of August, sales had decreased by 45.2% year-onyear, but the sales of domestic cigars had increased by 155%.
Existing issues
However, the development of Chinese cigars also met with some difficulties. First of all, in terms of operation, commercial tobacco companies still operated according to the same business model as cigarettes. However, cigar consumers are a small and high-end group, which is quite different from the large-scale distribution of cigarettes. In addition, cigars are not FMCG and may need long-term maintenance. What’s more, its proportion of revenue for a sales company is very small and so the enthusiasm for this product may not be as high.
Final Thoughts
In the past five years, the growth rate of China’s domestic cigar market has been maintained at more than 50%, especially the sales of medium- and high-end handmade cigars which have increased more rapidly. In view of the changes in the consumer market situation, STMA has clearly put forward the strategy of developing Chinese cigars. Cigars are gradually completing the transformation from a “beneficial supplement” to becoming one of the important components of the industry map.