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Tobacco in Hong Kong, China 

Tougher legislation dents cigarette sales

Stricter legislation in the form of a ban on smoking in public places in 2007 led to yet another year of declining cigarette volume sales. The ban is set to become absolute from July 2009 onwards, encompassing popular smoking locations such as restaurants, bars and mah-jong parlours. Smoking prevalence also decreased over the review period. Limited time and places available has led smokers to smoke more quickly, with some smoking just half a cigarette at a time. In 2009 the government increased taxes on cigarettes by 50%, which is expected to be a further blow to the tobacco industry in Hong Kong over the forecast period.

Mid-tar category dominates, but low-tar the best performing

Mid-tar brands continued to dominate cigarette sales in Hong Kong in 2008, accounting for more than 55% of sales during the year. That said, mid-tar and high-tar cigarettes both registered a decline in 2008 as consumers increasingly shifted towards lower-tar products, which achieved positive growth. With male smokers opting for lower-tar alternatives, the growing demographic of female and young smokers has also fuelled growth of low-tar products. Many consumers perceive lower-tar cigarettes as being healthier than their high-tar counterparts.

Philip Morris Asia continues to dominate

Philip Morris Asia remained the dominant player in cigarettes in 2008. The company owns the leading brand, Marlboro, which accounted for nearly half of all cigarette sales in 2008. Marlboro has captured a loyal customer base through its strong and well-established brand name as well as its wide distribution network throughout Hong Kong. To further strengthen its leading position, Philip Morris Asia launched its new brand L&M in the second half of 2008 to capture more consumers.

Convenience stores the leading distribution channel

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