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August, 2008

YCT: The Tale of Yellow Crane Tower

By Allen Liao

The fabled rise of a high-grade cigarette brand.

The rise of Yellow Crane Tower (YCT) - a famous high-grade cigarette brand of China Tobacco of Hubei Tobacco Industrial Corp. (CTHTI) in central China’s Hubei province - sounds just like a fable.

Over recent years, high-grade cigarette brands have emerged in China, one after another. However, most of them were little more than “a flash in the pan.” In contrast, YCT, a cigarette brand named after the centuries-old Yellow Crane Tower in Wuchang of Hubei province, has proven to be the brightest rising star of the many high-grade cigarette brands.

The Yellow Crane Tower cigarette brand was created in the 1920s, and in 1983, production of YCT brand cigarettes resumed. In 1995, it appeared with a completely new look, and it has since developed into a high-grade cigarette brand. After the debut of YCT 1916 in 2004, YCT has achieved a developmental leap-forward. In 2007, annual sales volume reached 250,000 cases (12.5 bn cigarettes), with the annual sales income topping RMB10 bn (US$1.4 bn). YCT spent just four years realizing a breakthrough in sales volume growth and a simultaneous improvement in product, establishing its status as a big competitive high-grade cigarette brand.

“In 2008, the annual sales volume of high-grade cigarettes of the YCT is expected to go up once again by a net 100,000 cases or more year-on-year, creating yet another fable,” said Peng Mingquan, General Manager of CTHTI, in a recent interview with Chinese news media. “This means that Hubei Province will be able to change the records of both production and sales of high-grade cigarettes in China. YCT is gradually becoming a national-level, high-technology, high-quality, and high-level cigarette brand.”

Dream Brand
In moments of leisure, surrounded by gentle smoke, smokers wish to enjoy a reduced-harm cigarette while absorbing nicotine. The birth of light, elegant, and fragrant YCT cigarettes actually makes such dreams a reality.

The name of YCT itself gives sufficient scope for consumer’s imagination. Built in 223 A.D. and located on Snake Hill in Wuchang, the real Yellow Crane Tower is one of the “Three Famous Towers South of Yangtze River” (the other two are the Yueyang Tower in Hunan province and the Tengwang Tower in Jiangxi province). For hundreds of years, there have been many fairy tales about a saint riding a yellow crane to the sky.

YCT has often been mentioned as a great architectural structure in poetic works for centuries. In particular, the Tang Dynasty poet Cui Hao (618–907) wrote one of the most famous and well known poems about it. A cigarette brand named after the tower consequently attracts a mystique and a sense of “floating with the wind” in the minds of Chinese smokers.

The sense of luxury successfully created by YCT gives consumers high self-esteem. The packaging is highly impressive, combining classical with contemporary, oriental with occidental, simple yet detailed. The golden tipping of cigarettes creates a sense of luxury. The cigarettes are made with hand-selected leaf tobacco enriched with selenium grown in Shennongjia Mountain - a natural reserve in Hubei province. Both the output and sales volume of YCT brand cigarettes are subject to strict administrative restriction. As a result, it is only available in selected markets. For consumers, all these factors have given rise to the understanding that YCT is a high-grade cigarette brand.

The YCT brand family meets varying consumer demands. The brand has several variants enriched with cultural meanings or historical significance, including YCT 1916, The Tao Way (Taoism), The Beyond (roaming around and going beyond), and The Fragrance (lightly fragrant), creating a complete set of highly competitive, high-grade cigarette products. Every series demonstrates its connotations with a unique style. For example, YCT 1916 looks classical and nostalgic. The Fragrance emphasizes simplicity and classics. The Beyond suggests a romantic and classic route. And The Tao Way signifies mutual integration between humanity’s history and great changes.

In November 2006, the State Administration for Industry and Commerce rated YCT as a well-known Chinese trademark and one of the “Top Ten Dream Brands” of the tobacco industry.

Legend of Quality
Besides its fascinating cultural messages, YCT attracts consumers with its outstanding inherent product quality.

The production of all YCT brand cigarettes, from the growing of leaf tobacco to the final production, is not inferior to the creation of a work of art.

The leaf tobacco used in YCT is all native leaf tobacco grown on the well-cultivated farmland of natural environments such as the Shennongjia Mountain areas. Both experts and tobacco growers take great care in the development of tobacco seedlings, agronomic management, and flue-curing of the tobacco leaf. When ripe and picked, the leaf tobacco is put into new dual-system dehydration curing barns to turn it into aromatic fine leaf tobacco.

YCT technicians, inspired by the knowledge that the longer liquor is stored, the more fragrant it will be, have created specially made wooden casks for storing cut tobacco. The special substances generated inside a wooden cask integrate perfectly with the aroma of cut tobacco stored in it, contributing to making the cigarette flavor more enjoyable, increasing the mildness of the tobacco aroma, and imparting a unique aromatic style to cigarettes made with it.

Many advanced technologies are applied during the manufacture of YCT. Through researching the processing parameters and adaptability of products, CTHTI has made tobacco cutting control parameters specific. It is capable of making real-time readjustment of modularization, function, and flexibility to meet specific control parameters during production. In doing so, CTHTI has succeeded in developing technologies for making YCT Chinese-style cigarettes with unique characteristics.

After careful development over the past few decades, YCT now typifies Chinese-style cigarette products, whose style of light fragrance stems from perfect integration between the mild aroma of tobacco and aromas of selected natural herbs, bringing fine sensory enjoyment to consumers.

New Rising Star
“CTHTI is a representative of new forces of the tobacco industry that are rising rapidly,” said State Tobacco Monopoly Administration (STMA) Director-General Jiang Chengkang after a visit to the YCT Scientific-Technological Park in September 2007. “It is also a symbol of the development and progress of the tobacco industry over recent years. The development and changes of CTHTI over the past few years have enabled us to see the hope of development of China’s tobacco industry.”

CTHTI is striving to turn itself into the new rising star of tomorrow. As far as the prospects for its future development are concerned, Peng Mingquan said that at a time when the tobacco industry is still experiencing intense competition among powerful or big tobacco manufacturers, the market supply of YCT and Red Golden Dragon - another leading brand of CTHTI - is quite limited because of insufficient annual production. Therefore, it is imperative for CTHTI to enlarge its capacity through the establishment of new cigarette factories and through continued improvement of both production technologies and product quality.

In 2006, STMA approved CTHTI’s plan for the technical transformation and relocation of Wuhan Cigarette Factory (WCF) - the leading cigarette making subsidiary of CTHTI - to a new site in the eastern part of the Western Lake area of Wuhan City. Construction is expected to start in the second half of 2008.

Covering a total area of 1,700 mu (113 hectares), the new factory will have under it a management head office, a technological research and development center, a marketing center, and a raw material purchase and logistic supply center. In the first-phase of the project, a new cigarette making facility with an annual cigarette production capacity of 1.5 mn cases will be built.

When completed, the new factory will become a tobacco manufacturing enterprise with a most complete range of functions, boasting the largest annual production capacity enjoyed by a single-entity, and with the highest standards of environmental protection in China.

WTG will contribute to the development of new production lines embodying the unique light fragrant characteristics of YCT, ensuring the brand will enjoy an even brighter future.

Tobacco International - August, 2008

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