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Gold Bond Enterprises Managing Director David Lee: “There is very strong growth. If you take 2002 sales as 100%, then last year’s growth was +175%, and this year so far is +245%.” |
CANNES. While the tobacco industry is seeing a general decline in sales, Chunghwa cigarettes are bucking the trend, as Chinese travellers drive up demand.
Following the relaxation of travel restrictions on the Chinese to European nations, sales of Chunghwa have increased dramatically in Europe.
Gold Bond Enterprises Managing Director David Lee told The Moodie Report: “There is very strong growth. If you take 2002 sales as 100%, then last year’s growth was +175%, and this year so far is +245%.”
Gold Bond Enterprises is an agent for Shanghai Tobacco in European markets. Chunghwa cigarettes are now sold in travel retail outlets in Paris, London, Amsterdam, Zurich, Geneva, Milan, Rome and Greece.
Lee said that only Chinese nationals would buy these cigarettes, but prices in European duty free are so competitive compared with the Chinese domestic market that the cigarettes have emerged as very popular items.
In China, each packet retails for about €5, whereas in European travel retail, each packet is sold for only €3.
“I have seen, when I was stopping over at European airports, some Chinese who grab 20 or 30 cartons,” said Lee.
He believes that some of the big buyers may be reselling the cigarettes for a profit back home. “Those who don’t smoke buy some too – they buy as gifts or they buy to sell back home,” he said.
Chunghwa cigarettes are particularly popular as the high prices mean that people like to carry them around as status symbols, said Lee.
“To show they have social status, they would buy a packet to put on the table when they are dining in a restaurant,” said Lee.
In addition, the red packaging appeals to superstitious Chinese who believe that red is an auspicious colour, he added.
Lee believes that the sky is the limit for sales as increasing numbers of Chinese arrive in Europe, but said that the problem is with supply.
“There is very strict control in volume produced, so supply is a problem,” he said.
But the company now wants to expand to the duty paid market. It has entered the duty paid market in the UK as “there is a huge Chinese population” and it wants to go into other markets where there are significant Chinese communities.
“If you smoke, you’ll know that smokers are very loyal to cigarette brands. The Chinese who have smoked Chunghwa cigarettes will always be loyal to it,” he said.
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