Core Viewpoint - The National Development and Reform Commission has issued a management approach to support low-carbon transformation in coal power and coal chemical projects, as well as promoting clean energy alternatives in various industries [1] Group 1: Policy Support - The new management approach emphasizes support for the low-carbon transformation of coal power units and coal chemical projects [1] - It encourages the replacement of coal-fired boilers and industrial kilns in industries such as food, tobacco, textiles, paper, and dyeing with clean energy solutions [1] - The initiative also supports urban and rural residents in adopting geothermal and biomass energy for heating purposes [1]

Core Viewpoint - The data from the National Bureau of Statistics indicates a decline in cigarette production in China, with April 2025 showing a year-on-year decrease of 2.4% and a cumulative decline of 0.1% for the first four months of 2025 [1] Summary by Category Production Data - In April 2025, China's cigarette production reached 193.2 billion sticks, reflecting a year-on-year decrease of 2.4% [1] - The cumulative cigarette production from January to April 2025 totaled 1,037.05 billion sticks, which represents a slight decline of 0.1% compared to the same period in the previous year [1]

Core Viewpoint - The traditional tobacco and liquor retail industry is facing a systemic crisis, driven by internal operational rigidity and external market pressures, leading to significant profit erosion and operational challenges for retailers like Wang Cheng [6][10][18]. Group 1: Industry Challenges - Wang Cheng's tobacco shop, once thriving, is now struggling due to a collapse in the pricing system for high-end cigarettes, with sales volumes dropping significantly and profits dwindling [7][8]. - The traditional profit model of "cigarettes cover costs, liquor generates profit" has been disrupted, as cigarette sales no longer cover operational expenses, and liquor sales are embroiled in price wars [9][10]. - Retailers are resorting to "abandoning orders" and "downgrading" their tobacco licenses as a form of silent resistance against the pressures from upstream tobacco companies [9][10]. Group 2: Internal and External Factors - Internal issues stem from a rigid tiered system that ties tobacco licenses to sales volumes, forcing retailers to stock unsellable products alongside popular ones, which becomes unsustainable in a cooling market [12][15]. - External pressures include the rise of e-commerce platforms that disrupt traditional sales channels, leading to a loss of core customers and diminishing profit margins for high-end liquor sales [16][18]. Group 3: Transformation Strategies - Retailers are exploring two main transformation strategies: integrating with online platforms for digital operations and enhancing community service through in-person interactions [20][21]. - While online platforms can generate some new orders, they often fail to address the core business decline, as the demand for high-margin products does not align with the instant retail model [22][23]. - Community-focused strategies emphasize building trust and personalized relationships with customers, which can create a competitive edge that online platforms cannot replicate [24][25]. Group 4: Future Outlook - The traditional tobacco and liquor retail sector is at a critical juncture, where merely adopting new channels will not suffice; a deep transformation of the business model is essential for survival [26].

Core Points - The London Stock Exchange's FTSE 100 index closed at 9483.58 points on October 7, with a slight increase of 4.44 points, representing a 0.05% rise [1] - Major European stock indices also experienced gains on the same day, indicating a positive market trend across the region [1] Top Gainers - The top five gainers in the London stock market included: - DCC plc, which saw a stock price increase of 3.90% - Imperial Brands, with a rise of 3.36% - Burberry Group, up by 3.04% - Beazley plc, increasing by 2.78% - British American Tobacco, which rose by 1.82% [1] Top Losers - The top five losers in the London stock market included: - Entain plc, which experienced a decline of 6.54% - Mondi plc, down by 4.82% - John David Group, decreasing by 2.44% - Spirax-Sarco Engineering, down by 2.26% - Babcock International Group, which fell by 2.19% [1] Other European Indices - The CAC 40 index in Paris closed at 7974.85 points, with a gain of 3.07 points, reflecting a 0.04% increase - The DAX index in Frankfurt closed at 24385.78 points, rising by 7.49 points, which is a 0.03% increase [1]

Group 1: Consumer Market Trends - The recent National Day and Mid-Autumn Festival holiday period, expected to boost consumer spending, instead revealed a disappointing market performance, with widespread discount promotions failing to ignite shopping enthusiasm [1][3] - Many products, including high-end liquor and cigarettes, are experiencing significant price drops, indicating a shift in consumer preferences towards health and rational spending [3][9] - Sales of high-end liquor brands like Moutai and Wuliangye have declined sharply, with Moutai's price dropping from 2200 yuan to 1740 yuan, a decrease of over 20% [5][6][7] Group 2: Changing Consumer Preferences - The social status associated with luxury goods, such as high-end liquor and cigarettes, is diminishing, as consumers prioritize health and practicality over social capital [11][13] - The market for premium products, including mooncakes and crabs, is shifting towards more affordable options, with consumers increasingly rejecting high-priced items in favor of better value [19][21] - The demand for traditional luxury items is declining, as evidenced by the poor sales of extravagant mooncake gift boxes and the reduced interest in high-end crabs from the Yangcheng Lake region [23][39] Group 3: Automotive Market Dynamics - The automotive market is experiencing a significant downturn, with showrooms unusually quiet during the holiday period, contrasting sharply with previous years [25] - Both traditional fuel vehicles and electric vehicles are engaged in aggressive price competition, with notable discounts being offered across various brands [27][29] - Consumer hesitation and a preference for electric vehicles, driven by lower operating costs and increased charging infrastructure, are reshaping market dynamics [31][37] Group 4: Broader Economic Implications - The overall decline in consumer spending during the holiday season reflects a deeper transformation in value systems, moving away from traditional consumption patterns towards more pragmatic choices [39][41] - The market is increasingly favoring brands that offer transparent pricing and high product quality, signaling a shift towards a more informed and rational consumer base [41]

Core Insights - The report by Zhiyan Consulting highlights a significant decline in China's flue-cured tobacco exports in August 2025, with a volume of 0.69 million tons, representing a year-on-year decrease of 24.5% [1] - The export value for the same period was $0.36 million, which also reflects a year-on-year decline of 14.5% [1] Industry Overview - Zhiyan Consulting is recognized as a leading industry consulting firm in China, specializing in comprehensive industry research reports, business plans, feasibility studies, and customized services [1] - The firm has over a decade of experience in the industry research field, providing in-depth insights and solutions to empower investment decisions [1]

Industry Overview - The tobacco industry is a unique consumer goods sector with a supply chain that spans agriculture, manufacturing, commerce, and retail [1] - The supply chain begins with the cultivation of tobacco leaves, which are primarily grown by farmers in specific regions under suitable climatic conditions [1] - The midstream segment involves the production of tobacco products such as cigarettes, cigars, and e-cigarettes, requiring high craftsmanship and quality control [1] - The downstream segment includes wholesale, logistics, and retail sales, with a highly concentrated distribution network in China [1] Market Dynamics - The tobacco industry is significantly influenced by policies, including production quotas, tax adjustments, and advertising restrictions, which can have profound effects on all segments of the supply chain [2] - The global trend towards smoking cessation and public health initiatives is prompting companies to accelerate their transformation efforts, exploring harm-reduction products and diversification strategies [2] - Despite the relatively stable demand due to the inelastic nature of tobacco consumption, long-term growth potential is constrained by smoking control policies and increasing health awareness [1][2] Investment Considerations - Investors should consider the policy environment, industry barriers, changes in consumer demand, and companies' innovation capabilities when evaluating the tobacco sector [2] - A comprehensive understanding of the entire supply chain is essential for rationally assessing the long-term value and potential risks of related assets [2]

Core Viewpoint - The data from the National Bureau of Statistics indicates a decline in cigarette production in China for August 2025, with a year-on-year decrease of 2.2% [1]. Group 1: Production Data - In August 2025, China's cigarette production reached 216.7 billion sticks, reflecting a 2.2% decrease compared to the same month in the previous year [1]. - Cumulatively, from January to August 2025, the total cigarette production in China was 1,819.12 billion sticks, showing a slight increase of 0.1% year-on-year [1]. Group 2: Industry Insights - The data is sourced from the National Bureau of Statistics and compiled by Zhiyan Consulting, a leading industry consulting firm in China, which specializes in providing comprehensive industry research reports and consulting services [1].

Core Viewpoint - Smoore International (06969) experienced a significant intraday increase of over 5%, closing at HKD 18.07 with a trading volume of HKD 144 million, driven by the launch of the Glo Hilo product in Poland and anticipated market expansions [1] Group 1: Product Launch and Market Expansion - On September 18, the Glo Hilo product was officially launched on the Glo website in Poland, featuring improved separate and integrated devices with seven color options and an initial offering of 13 different flavored tobacco products (8 tea-based and 5 tobacco flavors) [1] - The marketing strategy includes a promotional campaign by British American Tobacco, offering four packs of tobacco with the purchase of heating devices, indicating a strong push for the Glo Hilo product [1] - The next anticipated market for Glo Hilo is Italy, projected to be the third-largest global market for heated non-combustible (HNB) products by 2024, with expectations for orderly expansion into other incremental markets [1] Group 2: Market Expectations and Valuation - According to CICC, as the product matures, HNB new products are generally expanding globally by reusing trial sales experiences, which is expected to adjust market expectations regarding market entry pace and user growth rates [1] - The improvement in market share, revenue growth, and profit realization are expected to anchor reasonable valuations for leading international tobacco brands, which are leveraging innovative new products to enhance their market share [1]

Core Viewpoint - Smoore International (06969) experienced a significant stock price increase of 5.67%, reaching HKD 18.07, with a trading volume of HKD 144 million, following the launch of the Glo Hilo product in Poland [1] Group 1: Product Launch and Market Expansion - On September 18, Glo officially launched the Glo Hilo product in Poland, featuring improved separate and integrated devices with seven color options and an expanded selection of 13 flavors (8 tea-based and 5 tobacco flavors) [1] - British American Tobacco is enhancing the marketing efforts for Glo Hilo by offering promotional activities, such as providing four packs of cigarettes with the purchase of heating devices [1] - The next anticipated market for Glo Hilo is Italy, projected to be the third-largest global market for heated non-combustible (HNB) products in 2024, with expectations for orderly expansion into other incremental markets [1] Group 2: Market Expectations and Valuation - CICC noted that as the product matures, HNB new products are generally expanding globally by reusing trial sales experiences, which is expected to adjust market expectations based on new market development pace and user growth rates [1] - The improvement in market share, revenue growth, and profit realization are expected to anchor reasonable valuations for leading international tobacco brands leveraging innovative new products [1]