Reviewed by:-

LALIT SONI (A-73)

CIGARETTE Analysis IN INDIA

The cigarette industry is one of the oldest industries in India.

It is an important AGRO based Industry. It is highly labor intensive & provides livelihood

to about 5 million people directly and indirectly. Cigarette is an item falling under the First

Schedule to the Industries (Development & Regulation) Act, 1951 and requires an industrial license.

India is the second largest producer of tobacco in the world.

It exports a good amount of cigarette in various countries, which generates a handsome amount of revenue for the company.

THE INDUSTRY IN SPECIFIC

Cigarette exports during 2007-08 increased by 11 % in volume terms over the exports of previous year.

Major markets for cigarettes are UAE and USA, Romania, Saudi Arabia and Iraq where the demand for generic low cost cigarettes is growing.

THE INDUSTRY IN SPECIFIC

Cigarettes account for only 15% of tobacco

consumed in India unlike world pattern of 85%

due to prolonged punitive taxation

Cigarettes (15% of tobacco consumption)

contribute nearly 85% of Revenue to the

Exchequer from tobacco sector

Of the 58% of adult Indian males who consume

tobacco, barely 15% can afford cigarettes

Biri : Cigarettes ratio = 10 : 1

Annual per capita adult cigarette consumption

in India is appx. one tenth world average : 85

Future growth depends on relative rates of

growth of per capita income and moderation in

taxes

Cigarettes: Growth potential

Cigarettes: Growth potential

cigarette growth potential

chew tobacco 21 %bidis 43%Mfg exports 2%Un-Mfg exports 19%Cigarettes 15%

15 % cigarettes

Surveyed as per March-2009

LIST OF MAJOR PLAYERS IN INDIAN CIGRATTE INDUSTRY

ITC LimitedG.T.C. Industries

Ltd.

Godfrey Phillips (India) Ltd.

V.S.T. Industries Ltd.

Market shareINDIAN cigarette pie

ITC Godfrey PhillipsVSTGTC

VST 8%

ITC 72 %

GPI 12%

GTC 8%

BCG Matrix

Market attractiveness & Competitive strength is also important.

ITC - CIGARETTES

GTCI VST

GPI

?

One of India’s premier private limited groups with over 99 years.

Large & established Distribution Networks. Annually turnover of the co. is RS 2888

Crore  It is one of the eight Indian companies to

feature in Forbes A-list in 2004. It has more then 21,000 employees at more

then 60 location across India with 4,86,000 shareholders.

Ranks No. 4 among Indian listed Private Sector Companies by market cap. (@ April 09)

Rated as- one of India’s Most Respected Companies (IMRB-Business world Survey 2006)

ITC ONE OF INDIA’S MOST VALUABLE CORPORATIONS

On 24th Aug. 1910 the company was incorporated as a private company under the name, Imperial Tobacco Co. of India ltd.

On 27th Oct. 1954 the company was converted into a public limited company.

The name of the company was changed from the Imperial Tobacco co. of India ltd., to India Tobacco co. ltd. In May 1970.

On Oct. 1972 company entered into Hotel business.

On 2000 company has launched a project “ e- choupal” in Bhopal to Web-enable farmers to make a beginning in Agriculture e-trade.

During the same year ITC has launched Wills sport, a full range of internationally styled premium wear for Men & Women.

ITC HISTORY OF THE COMPANY

Vision and Mission VisionSustain ITC's position

as one of India's most valuable corporations through world class performance, creating growing value for the Indian economy and the Company’s stakeholders.

MissionTo enhance the wealth

generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.

They have a DIFFERANTIAL MARKETING STRATEGY type.

o Cigarette companies manipulate menthol levels to lure young smokers

o Major brands and their advertising campaigns Always use their existing channels. Utilizing nominal resources related with the brand Brand Ambassador are selected according to the

brands and mostly are YOUTH ICONS They emphasize on going with the FLOW and

making their Followers .

MARKETING STRATEGY

FMCG- CIGARETTES

Market leader in India. Powerful Brands across segments. Leadership in all segments - geographic & price. Extensive FMCG distribution network. Direct servicing of 1,00,000 markets & nearly 2

million Retail outlets. Exciting long term growth potential. World-class state-of-the-art technology and

products.Investment - Rs.10 billion in six years About 71% of the Total Turnover depends upon

this Business.

ITC’S CIGARETTE BUSINESS

Super Premium Products Insignia ITC Insignia. 97 mm.Cost: Rs 130 for 20 ‘‘Where quality touches infinity’’, ‘‘redefine

perfection’’ Advertised in Higher SES area

555ITC 555 premium filter: regular 84 mm.Cost: Rs 100 for 20Advertised in Higher SES

CIGARETTE PRODUCTS

India KingITC India King. 84 mm.Cost: Rs 100 for 20“Rule your World”Advertised in Higher SES area

Wills Silk Cut(king size) ITC Wills Silk Cut Filter: 84 mm. Cost: Rs 88 for 20 ‘‘A blend so right a filter so fine’’ Advertised in Higher SES

Wills Classic/Mild/Regular/Menthol / Ultra Mild

ITC Wills Classic/Mild Filter: King 84 mm. Cost: Rs 94 for 20 ‘‘Discover a passion’’ Advertised in Higher SES

Wills Navy Cut(Filter Tipped) ITC Wills Navy Cut Filter: ,74 mm. Cost: Rs 68 for 20 ‘‘Made for each other’’ Advertised in Higher SES

Premium Products

Wills Navy Cut(Duotec)ITC Wills Navy Cut Filter: ,84 mm. Cost Rs 80 for 20Advertised in Higher SES

Navy Cut(Regular Size)ITC Wills Navy Cut Filter: ,69 mm.Cost Rs 48 for 20 Advertised in Higher and Lower SES.

Gold Flake(Premium) ITC Gold Flake Premium: Regular 69 mm. Cost: Rs 58 for 20 ‘‘It’s Honeydew Smooth’’, Smooth, exquisite, timeless. But then, all art is’’ Advertised in Higher and lower SES

Gold Flake King/Lights/Ultra Light Filter ITC Gold Flake King/Light: Regular 84 mm. Cost: Rs 88 for 20“Now in a Bevelled Edge pack” Advertised in Higher and lower SES

benson & hedges(light & hard)o B & H under ITC Regular Size 84mm.o Cost : Rs 100 for 20o Advertised in Higher and Lower SES

Marlboro (light & hard)o Phillip Morris under ITC Regular Size 84 mm.o Cost : Rs 100 for 20o Advertised in Higher and Lower SES

Bingo ProductsWills Flakeo ITC Wills Flake Filter Regular Size 69mm.o Cost : Rs 58 for 20o Advertised in Higher and Lower SES

Bristolo ITC Bristol Regular Size 69 mm.o Cost : Rs 32 for 20o ‘‘Rise to the taste’’o Advertised in Higher and Lower SES

SWOT Analysis StrengthBiggest and the

largest player in the Indian tobacco market with a market share of 80%.

Its Gold Flake tobacco brand is the largest FMCG brand in India - and this single brand alone holds 70% of the tobacco market.

WeaknessIt still has to

consolidate its foot in the cigar market largely dominated by Godfrey Philips.

SWOT Analysis OpportunitiesITC is moving into new

and emerging markets like developing countries of Eastern Europe, Africa etc.

ThreatsThe obvious threat is

from competition, both domestic and international.

Health hazardIncreasing tax in

Cigarettes

• Entry Barrier ANALYSIS• Supplier Bargaining Power• Buyer's Bargaining Power• Industry Rivalry• Substitutes

Porter’s Five Forces analysis

  REVENUES      Growth-Share 

Matrix

Y/E March (Rs cr) FY2008 FY2007% Growth

% Contrib. % Market Share Growth Share

FMCG-Cigarettes 13,825.6 12,833.7 7.7 58.41 70% Low High

Summary on ITC’s SBUs

GPI- Cigarettes

The second largest player in the Indian cigarette industry.

Annual turnover exceeds INR 1800 crore (approx. US $369.6 million)

Has two major stakeholders, one of India's leading industrial houses - the K. K. Modi Group and one of the world's largest tobacco companies, Philip Morris.

Godfrey Phillips India ltd.

Incorporated in India in 1936, the Company established its own manufacturing facilities in 1944

On 1946 GODFREY PHILLIPS became a Public Ltd. Co. with its manufacturing operations in Mumbai

Its products are distributed through an extensive India wide network comprising 484 exclusive distributors and over 800,000 retail outlets

GPIHISTORY OF THE COMPANY

Vision and Mission VisionTo become a leading

tobacco player in India and beyond.

Missionempowers all its people

to think and act radically, stretch relentlessly and generate path breaking ideas and strategies to propel the Company. This helps to create and build powerful brands with unmatched service and world class processes.

Four Square Filter GPI Four Square Filter: Regular.69 mm

Cost: Rs 48 for 20 ‘‘Man with the smooth edge’’ Advertised in Higher and Lower SES

Stellar GPI Stellar Slims Cost: Rs76 for 20 “Low nicotine, High Satisfaction” Advertised in Higher SES area

MAJOR Brands

GPI Red and Whiteo GPI Red & White flakeo Text in Hindi ‘‘Hum red and white peene walon ki baat hi kuch aur hai’’o Cost: Rs 48 for 20 Advertised in Higher and Lower SES

I-Geno GPI Red & White Regular .o Introduced India’s 1st King size 5’s packo India’s 1st Euro Norm 10-1-10 cigarette holds the

promise of an advanced cigarette quality and immense style.o Advertised in Higher and Lower SES

jaisalmero GPI Jaisalmer Premium king size .o It is a luxurious blend of finest sun dried Virginia tobaccos which deliver a smooth mellow flavor.o Advertised in Higher and Lower SES

north poleo GPI North Pole menthol o largest selling menthol cigarette in Indiao Advertised in Higher and Lower SES

cavanderso GPI’s Oldest & most trusted brand.o providing superb value and satisfactiono Cost:Rs 68 for 20o Advertised in Higher and Lower SES

tippero Phillip Morris Tipper o The fastest growing micro segment brand o Advertised in Higher and Lower SES

SWOT Analysis StrengthThe second biggest

tobacco company in IndiaThe first and only tobacco

company to organize the fragmented cigar market in India and secure its position as the market leader in the cigar distribution.

Partnering with some of the top most players in the international tobacco industry.

Weaknesslow popularity of

most of its products No sole authority

SWOT Analysis OpportunitiesAlready present in the

Middle East, West Africa, South East Africa and South East Asia, GPI can strengthen its position as an international player by entering new markets.

Even expanding market share in the Indian tobacco market is an opportunity

ThreatsITC getting into the

cigar marketIt has a mere 12% in

market share

New Entries:Buyers bargaining powers:Oligopoly market situation.

➢ Suppliers bargaining power:Fragmentation, consolidation & integration.Low switching costs

➢ Threat of substitutes:Depends on buyer to buyer. Some are Brand Loyalists.

➢ Competitive rivalry:New innovative products by rivals.

Porter’s Five Forces analysis

Golden tobacco ltd.

o GPC is a professionally managed organization in the field of tobacco and tobacco related products.

o Established in the year 1930 by the late Shri Narsee Monjee.

o GTC is the first wholly owned company specializes in manufacturing & exporting an exclusive range of Cigarettes, Flavor Cigar & Non Tobacco smoking product.

o GTC has manpower strength of 2000 employees spread across manufacturing.

o The Company has two major production facilities in Mumbai as well as Baroda.

GOLDEN TOBACCO LIMITEDProfile

Vision and MissionVisiono To be a largest,

Human sensitive , Global Tobacco Company.

Missiono Constant R & D to develop

the finest blends guided by relentless focus to deliver world class packaging, with the aim to exceed expectations of our consumers both in India and around the globe . All of our long-term strategies & short-term will be bound by the finest standards of professionalism and dedication.

MARKETING STRATEGY We work with commitment , dedication &

Integrity towards a common goal. We are an equal opportunity Employer. We believe that learning is a life long process &

provide an environment attuned to growth. We are a balance of the boldness, energy and

courage of youth, sharpened by the experience, foresightedness and wisdom of veterans.

Major brands PANAMA A Legendry brand of GTC. The company has launched several variants in the

Panama portfolio. Some of these are:o Panama Virginia Regularo Panama Filtero Panama Goldo Panama Premium Filtero Panama Delighto Panama Mentholo Panama Mini Kings

chancelloro The Chancellor name is given to Golden Tobacco’s Finest

Blends.o Chancellor as a symbol of quality cigarettes. Chancellor Browns:o A unique Premium blend in the king size segmento It is a sophisticated & stylish product. Chancellor Royale:o Which appeals to the modern age consumers who have

royal tastes & hearts of Gold. Chancellor Exclusive:o Unique Brown Cigarettes in Regular size with Distinctive

Flavor. Chancellor Harvard Luxury:o A Consumer’s Favorite since ages. Chancellor Lights:o A mind blend of finest tobacco, in a style White pack.

Goldeno Carving a niche for itself in the crowded marketplace

is the Golden’s Brand.o An assurance of quality, for the value conscious smoker. Golden’s Gold Flake o A strong blend.o Which allows the smoker to derive immense pleasure.

Golden’s Majoro A tribute to the Macho, Courageous and Bold

personalities.o The packaging of Golden major has been inspired from

the Defense fraternity.

taj chapo A heritage brand of Golden Tobaccoo Market for more than 35 years. o The only Premium brown cigarette in the non filter segment.

style mini kingso Launch more than 25 years agoo To cater to the changing youth of the country, The name STYLE says it all.o A distinctive blend , which was very well accepted by

the Indian Youth.

steel(Regular & king size)o Steel-” It Separates Men From Boys”.o Targeted at the youthful Rich & smooth smoker, With new look packaging & style.o Regular size of Steel has been a huge success.

June(Light & menthol Flavors)o Premium quality Virginia blend producing rich & pleasant characteristics.o June Slim has been designed meticulously to suit the life styles of those who like to carry themselves.

just blacko A Flavored Filter Cigar o Flavors: Full flavor, mild, menthol, cherry, Chocolate vanilla, peach, rum, raspberry, Sour apple, strawberry & grapes.

lipso Lips flavored cigars(in tube pack)have a sweet filtered tip and are loaded with flavor.o Each cigar is packed in its own individual plastic

tube.o An ideal product to carry around in your pocket.

Vazir sultan Tobacco Industries ltd.

The company was incorporated in 1930 at Hyderabad .

The third largest player of Cigarette industry in India.

In 1984 the name of the Company was changed from The Vazir Sultan Tobacco Co. Ltd. to VST Industries Ltd.

The Company embarked upon a major modernization program designed to improve its competitive ability in domestic and international markets.

The company recorded revenues of INR3,401.7 million (approximately $84.5 million) in the fiscal year ended March 2008.

The Company manufactures and distributes Cigarettes The products are sold under the trade names `Charminar Specials', `Shah-I-Deccan', `Qila', `High Court', `Vazir' and `Ambassador'.

Vst ltd.Profile

chArms A Legendry brand of VST. ‘‘The taste that sets you free’’ Advertised in Lower SES

Major brands

Charminar A Legendry brand of VST. The company has launched several variants

in the Charminar portfolio. Some of these are:o Charminar Special Filtero Charminar Plain o Charminar Standard. Advertised in Lower & High SES Area.

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