A Case Study in Medium-Sized Cigarettes

by

By TobaccoChina Online

Nowadays, various types of innovative cigarettes have kept coming on to the market. From 2009 onwards, segment categories such as fine cigarette, flavored capsule cigarettes, and short-sized cigarettes have become a big hit. In early 2017, under the strong lead of the Chunghwa brand, medium-sized cigarettes have gradually come into public view, trendsetting the industry’s next tide.

China Tobacco Yunnan Outperforms

How are medium-sized cigarettes defined? According to the definition by the State Tobacco Monopoly Administration (STMA) in the Notice on Regulating and Supporting the Development of Fine Cigarettes, fine cigarettes refer to those with a circumference of 17 ± 1 mm. However, the country currently does not set a clear definition for medium-sized cigarettes. This article defines it as a cigarette product with a circumference of more than 19 and less than 23 mm.

In December 2016, Shanghai Tobacco Group’s Chunghwa (medium-sized cigarettes) entered the market, presenting medium-sized cigarettes to the public. At the beginning of 2017, another new Chunghwa medium-sized product was marketed. The two products have expanded the visibility of the category both in the industry and beyond. In 2018, China Tobacco Yunnan Industrial Co. Ltd (CT Yunnan) positioned 2018 as “The First Year of Medium-Sized Cigarettes” and listed eight products, a move showing that the group had made a breakthrough in the category. The efforts of these two companies will undoubtedly continue to make the medium-sized cigarettes more and more renowned. Other major companies under STMA also developed their own programs for this category.

Given the medium-sized cigarettes currently on the market, CT Yunnan’s products can be described as the most eye-catching.

CT Yunnan regards medium-sized cigarettes as a strategic category, striving to create a benchmark product that will lead the market. It is expected to improve brand image, seize opportunities for development, and realize the vision of leading the industry in terms of medium-sized cigarettes. Its new medium-sized cigarettes are uniformly designed with a 20mm cigarette circumference and 88mm cigarette length. The product line covers RMB180, 300, 400, 500, and RMB1,000 as well as other key prices. This series of cigarettes continuously strengthen the brand image and value of high-end cigarettes of Yunyan, creating strong market influence and impact.

At the beginning of 2018, CT Yunnan promoted three medium-sized cigarette products, respectively Dachongjiu, Gold Belt, and Diaoyutai. All are high-end cigarettes. The style characteristics and cultural heritage of the three products fully comply with the characteristics of the Chinese-style cigarette 2.0 era.

The Value Proposition of New Medium-Sized Products

In value positioning, the emergence of medium-sized cigarettes determined that its pricing must be high-end. In particular, with the introduction of new regulations on the pricing of new fine cigarettes by STMA, medium-sized products which are thicker than fine cigarettes correlates with the price. The pricing of medium-sized products already reached a consensus. The three products launched by CT Yunnan were all under the Yunyan brand or extended specifications of the core brands of the company. Depending on the brand’s own values, it is fully in line with the pricing logic of this segment.

Dazhongjiu continues its high-priced strategy and demonstrates the leading values of Dazhongjiu. Gold Belt is priced at RMB30 yuan/pack while Diaoyutai is RMB50/pack.

Dazhongjiu adopts an innovative fresh-keeping packaging design and bump and blueprinting technology for the first time. Gold Belt completely follows the packaging design of Gold Belt. The traditional cinnabar red background coupled with moiré patterns further highlights the classic charm of traditional Chinese culture. Diaoyutai brand’s most classic feature is the traditional “Cloisonne” design, highlighting the ancient charm. The Diaoyutai listed this time features yellow as the main color.

Multi-Dimensional Quality Assurance

CT Yunnan has the advantage of its raw materials, guaranteeing product quality throughout the manufacturing process. Dazhongjiu uses tobacco leaves from the three major producing regions of Zimbabwe, US, and Yunnan province itself. Hand-picked, top-level raw materials provide flavor, sweetening, and mellowing the products using molecular techniques, as well as using select original ecological medicinal materials, such as Pu’er tea. Last, a special particle mouthpiece for Dazhongjiu is created.

Gold Belt conducts a comprehensive screening of tobacco leaf from Yunyan’s main producing areas. At the same time, it selects high-quality tobacco leaves from world-famous regions such as Zimbabwe as a supplement to the raw materials, relying on a Yunyan high-end tobacco blend line to form the individualized processing technology of medium-sized cigarettes. It also gives full play to the abundant botanical resources in Yunnan, making the smoke sweeter and softer.

Diaoyutai selects high-quality tobacco leaves from Yunnan and Zimbabwe, integrates the application of a number of preserving humidity technologies and comprehensively enhances the comfort of the product. Meanwhile, it makes full use of the available spice plants resources to develop spice plant tobacco sheets, improving the product’s pleasant aroma and sweet taste.

Conclusion

At present, cigarette consumption is increasingly showing a trend of individualization and diversification. The emergence of medium-sized cigarettes, together with fine cigarettes, short-sized cigarettes, and flavored capsule cigarettes, serves as a new market and phenomena. As a real innovation with Chinese wisdom, medium-sized cigarettes will shine in 2018, growing to be a new category, and the three new products from CT Yunnan will serve as pioneers that will become the leading brand of this new category.