UK Cigarette Giant Starts China Push

25 May 2004

Cigarette giant Gallaher is poised to launch Memphis, one of its leading European brands, in China.

The move is a huge breakthrough for the marketer because it is the first time it has been allowed to sell its own locally produced cigarettes.

The launch in Shanghai follows seven years of talks between Gallaher and the state-owned China National Tobacco Corporation.

Initial annual sales are estimated at a mere 100 million, compared with Gallaher's global turnover of 160 billion.

China, however, is the world's biggest tobacco market puffing its way through 1.7 trillion cigarettes annually, equivalent to a third of global demand.

The move is a key step for Gallaher as China continues to loosen restrictions as a condition of entry to the World Trade Organisation.

China previously restricted cigarette imports to 1% of the market, the remainder accounting for local brands.

Gallaher has pre-empted its UK rivals in China. Imperial has agreed a similar deal for its West brand but has yet to start marketing it.

British American Tobacco plans to invest around £250 million ($448m;€374m) but has yet to agree a deal.

Gallaher is best known in its home market for brands such as Benson & Hedges and Silk Cut.

Data sourced from: Times Online (UK) ; additional content by WARC staff