MANVIR SINGH DHILLON

MEGHA SHARMA
MEGHA GOEL
MEENAKSHI
MEENAKSHI SHARMA
 OVERVIEW

Tobacco plays economically important role in Brazil, China,

India, Malawi, Turkey and Zimbabwe.

§Positive Effects

§Negative Effects
 CONTRIBUTION OF TOBACCO IN
INDIA

• Income-20 billion

•Employment-8,50,000 growers & 6 million workers

•Revenues- excise duty 59.4 billion+18 billion+ 2

billion(10.6%)

•Foreign Exchange-7790 million(5%)

 ARRANGEMENTS TO
ENCOURAGE

•Crop Insurance

•Assured Market

•Prompt payment of sale proceeds through Tobacco Board

•Auction System

•CTRI, improve varieties, irrigation, fertilizers

 SOME FACTS

•Wide variety of tobacco grown in 16 states.

•Most of variety grown is non- cigarette type.

•Economics of tobacco versus alternative crops.

•FCV, Burley & Oriental

 Types of Tobacco
Smoking Tobacco

• Beedi
• Hooka
• Cigarette

• Cigar
 Smokeless Tobacco:

•Gutka

•Natu

•Chewing

•Cheroot
 MARKETING CHANNELS AND
PRICE DETERMINATION

• Bidi Tobacco Market – largely unregulated.

• No effective institutional arrangements for the

regulation or marketing of Bidi Tobacco exist, due
to strong opposition of bidi tobacco traders.

• The Indian market for cigarettes and other

tobacco products is highly price sensitive.
 DEMAND TRENDS AND
FACTORS

•Indian Market – highly price sensitive- price

elasticity is 0.66

•Excise duty accounts for 61% of the retail price.

•Technology and equipment – improved processing,

reduce component prices, improved quality &
efficiency, reduced tar and nicotine
eg- 750 gm vs 1000 gms
 CONSUMPTION TRENDS:

•Cigarette – urban – 80%

•Bidi- rural – 80 %

•Factors responsible for consumption (cigarettes)

per capita income, population, changing tastes,
prices and government policies

•Factors responsible for consumption (bidi)

lower tax, traditional habits, low income, rural
masses, increased use by women(in certain states)
 EXPORTS

 EXPORT INCOME EXEMPTED FROM TAXES

 CREDIT AT SUBSIDIZED RATES

 RAW LEAF ACCOUNTS FOR 80% OF THE TOTAL EXPORTS

FROM WHICH FCV FORMS BULK OF THE EXPORTS

 INDIA ACCOUNTS FOR ONLY 4% OF THE WORLD EXPORTS

OF RAW TOBACCO
 AMONG MANUFACTURED PRODUCTS HOOKAH PASTE
ACCOUNTS FOR 80% IN VOLUME BUT 40% IN VALUE

 RUSSIA HAS BEEN THE LARGEST IMPORTER OF INDIAN

MADE CIGARETTES

 TO GROW INDIA HAS TO GROW MORE CIGARETTE TYPE

TOBACCO
 REASONS
 ABSENCE OF INTERNATIONALLY ACCEPTABLE BRAND NAME

 NON CONFORMITY WITH INTERNATIONAL STANDARDS

 OVERSEAS MARKETING LIMITATIONS IMPOSED BY FOREIGN

COLLABORATORS
 INDIAN BIDI INDUSTRY

•BIDI – TOBACCO + TENDU LEAF

•BIDIS ACCOUNT FOR OVER 50% OF TOTAL

TOBACCO USE. CIGARETTES ACCOUNT FOR LESS
THAN 20%.

•TENDU LEAF GROWN ON GOVT. OWNED

FORESTLAND

•2 MILLION PEOPLE ENGAGED IN LEAF COLLECTION,

4.4 MILLION ARE EMPLOYED FOR BIDI ROLLING

•MANUFACTURED IN SMALL SCALE & COTTAGE

INDUSTRIES
 SMOKELESS TOBACCO
 Smokeless tobacco is used to describe tobacco that is
consumed without heating or burning at the time of use

 Smokeless tobacco can be used either orally or nasally

 In South East Asia, smokeless tobacco product are commonly

handmade but commercial products are also available and
widely marketed. The oral use of smokeless tobacco is widely
prevalent in India.

 Different methods of consumption include: chewing, sucking

and applying tobacco preparations to the teeth and gums
 SMOKELESS TOBACCO PRODUCT : GUTKHA

Ø Gutkhais a tobacco product industrially manufactured and

used mainly in India.
Ø It is used by constantly chewing without letting the juice go
in and subsequently spitting the juice and contains
sweeteners and flavourings.
 The international tobacco industry
• Philip morris-PM (altria)
marlboro,chesterfield,morris

• British american tobacco-BAT

state express 555,lucky strike,etc

• Japan tobacco international-JTI

MILD SEVEN,SALEM

• GODFREY PHILLIPS INDIA(Part- Philip Morris)

MAJOR INDIAN PLAYERS
 BAT
BAT

 17.1% world market share

 Active business in 180 countries

 Leadership in over 50 countries

 52 cigarette factories in 44 countries

 Over 55,000 employees

 Winning and Leading in Industry Challenges

 GOAL
To grow brands and the value of the business, to improve
productivity and to embed the principles of corporate
responsibility around the Group.
PRODUCTS
 Global brands

14

12
113 11
10
9
 Brands

International
brands
ITC-Mission
VISION
 ITC-Brands
 Insignia,
 India Kings,
 Classic
 Gold Flake,
 Silk Cut,
 Navy Cut,
 Scissors,
 Capstan,
 Berkeley, Bristol
 and Flake
Brief about the Company
 Godfrey Phillips is today the second largest player in the
Indian cigarette industry with an annual turnover of
over US$ 265 million
 Incorporated in India in 1936, the Company established
its own manufacturing facilities in 1944
 The Company today is the proud owner of some of the
most popular cigarette brands in the country like Red
and White, Four Square, Jaisalmer, Cavanders, Tipper
and Prince
 Its products are distributed through an extensive India
wide network comprising 484 exclusive distributors and
over 800,000 retail outlets
 GODREY PHILIPS INDIA

 SECOND LARGEST PLAYER IN INDIAN CIGARETTE INDUSTRY

 INCORPORATED IN INDIA IN 1936

 2 MAJOR SHAREHOLDERS : KK MODI GROUP AND PHILIP

MORRIS USA

 TRANSFORMATION NFROM A MANUFACTURING COUNTRY TO

A FAMOUS TOBACO MARKETING BRAND
 KEY BRANDS

• Premium brands- Four Square, Red & White, Jaisalmer,

Cavanders & tippers.

• Recent entries- Stellar, the Ist slim cigarette & Ist Gen, the
first euro norm cigarette in india.
 GOLDEN TOBACCO LIMITED
BRANDS-

PANAMA CIGARETTES
FLAIR CIGARETTES
CHANCELLOR CIGARETTES
JUST BLACK FLAVOURED LITTLE CIGARS
JUNE SLIM CIGARETTES & LITTLE CIGARS
ESQUIRE CIGARETTES
LIPS EXOTIC FILTER CIGARS
JUST BLACK ROLLING SHAG
 Targeting teens- images used
Boys- toughness and masculinity
(images-marlboro man)

Female and femininity-

Associating brands with slimness, independence.

They use colorful graphics and images that catch their

attention.

They run in magazines that have a large teen readership.

Using shelf space-In stores, cigarettes are often placed close

to candy displays and other products popular with kids.

Promotional giveaways and tie-ins to sports and music events

 Menthols?
Heavily marketed to African
Americans.
Intended to make the first cigarette
less unpleasant.
 Theme Based Marketing
Classic, a premium cigarette brand of ITC

appeals to the affluent Indian who can easily identify with

music genres such as Rock, Jazz and Blues.

 Event sponsorship to brand
stretching

• During March 2001, ITC announced a self-imposed ban on

tobacco promotion. It withdrew from sponsorship of sports
events. This included withdrawing its support to the Indian
cricket team, which was sponsored by Wills and switch to other
forms of advertising, especially brand stretching.

• Alternate products of interest to both women and men were

linked to the Wills logo: Wills Sports Wear, and Wills Club Life
range of evening wear were introduced and are available at
Wills Lifestyle outlets all over the country and also accessible
via the internet.
 Diversification by ITC

. ITC Paperboards (manufacturing packaging boards)

. ITC International Business Division (the second largest exporter

of agro-products in India)

. Greeting cards (Expressions) and Stationery (Paper Kraft. range

of stationery aimed at college and working executives and
Classmate, range of notebooks for schoolchildren)

. Branded and packaged food business (Aashirvaad Ready Meals,

Aashirvaad flour and salt, Confectionary: .Mint-O. and,
Candyman. and snacks: Sunfeast).
 Reasons for Diversification

• Diversification reduces the dependence on tobacco profits

where markets are uncertain, but can also be used to buttress
the tobacco industry.

• To protect tobacco interests against the legal action and

criticism that the tobacco industry faces globally.

• Massive diversification of the tobacco industry is a pragmatic

‘hedging the bets’ strategy or a means of redeeming its public
image.
ITC and Life Insurance Corporation

ITC collaborated with LIC and is facilitating LIC in selling

their policies through the electronic network of ITC and
reaching out to the rural areas.

This is another ironical association, as a company-

manufacturing life-threatening products is collaborating with
agencies insuring the lives of people.
 Tobacco Advertising in India
• In 2004, Tobacco advertising contributed Rs. 3000-4000
million to the Rs. 80,000 million Indian advertising Industry ,
before the ban on advertising was imposed.

• Prior the enforcement of the ban, the cigarette advertising

budget was close to Rs. 3000 million per year with ITC leading
the spending.

• 12 months after the ban was enforced, the cigarette

industry would have spent around Rs. 3500 million on cigarette
advertising.
Trends in tobacco advertisement
before the enforcement of the
Indian Tobacco Control Act
Newspapers and Magazines
 Direct Advertisement in the print
media

Advertisement of a
gutka brand associated
with a marriage
ceremony
Cigarette brand linking
it with youthful images

Advertisement of a gutka brand

associating with a traditional
popular dance
 Outdoor advertising

Display advertisement of a
gutka brand behind a DTC bus
Current advertising and promotional
trends in India
Sponsorships of sports and cultural
events

Filmfare awards sponsored

by Manikchand in India
The Red & White Bravery Awards

Red & White Bravery Awards

sponsored by Godfrey Philips
 Surrogate advertising
• The tobacco industry in India is increasingly investing in non-
tobacco products by the same brand name as the tobacco product
and are aggressively advertising these products through all
available media.

• Gutka brands such as Simla, Goa 1000 and Pan Parag, skirt the
ban on tobacco advertising on television channels by resorting to
surrogate advertising for paan masala bearing the same brand
name.
 COSTS OF SMOKING

 CANCER

 CORONARY ARTERY DISEASE(CAD)

 CHRONIC OBSTRUCTIVE LUNG DISEASE(COLD )

 CONTROL MEASURES

 PRICING MEASURES

 NON-PRICE MEASURES
ADVERTISING RESTRICTIONS
HEALTH WARNINGS

 OTHER- BANNED IN PUBLIC PLACES

THANK YOU