The Cigarette Industry

Presented byRupesh Bansode M1144 Shawn Fernandes M1152 Tanvir Ahmed M11

 India is the second- largest producer of tobacco in the world after China. However, it holds a meagre 0.7 per cent share of the $30-billion global trade in tobacco. Cigarettes account for 85 per cent of the countrys total tobacco exports. Of the total tobacco produced in the country, around 48 per cent is consumed in the form of chewing tobacco, 38 per cent as bidis, and 14 per cent as cigarettes.

Industry Introduction

The per capita consumption of cigarettes in India is a tenth of the world average.
In the recent past, the consumption of tobacco has been reduced by antitobacco drives and the ban of consumption in public areas. The biggest player in this industry is ITC with a market share of 72 per cent. Source: http://www.business-standard.com/india/news/kitindian-tobaccoindustry/359751/

Intro cntd
Indias total cigarette production is valued at '22,000 crore, of which 12 per cent is exported. The cigarette market is dominated four key players ITC, Godfrey Phillips, VST and GTC. Cigarette sales in the country saw a drop in 2009 over 2008 due to high excise duties and other taxes The government has banned foreign direct investment in cigarette manufacturing for domestic consumption or exports, closing the doors for companies like Japan Tobacco, BAT and so on. Source: http://www.business-standard.com/india/news/kit-the-cigaretteindustry-in-india/408524/

Cigarettes Industrial production

Source:http://www.indiabiznews.com/?q=node/1391

Indias cigarette industry suffers inflation brunt

The inflation rate in the cigarette industry shows a growth of 11.57 per cent in fiscal 2010-11 from 3.62 per cent in the previous fiscal. Retail level of the sales have been decreased by 9% from 99.6 billion sticks in 1999 to 90.3 billion sticks in 2009. Retail volume sales of cigarettes have been stagnated for the past three-four year at around 90 billion level. Indias Cigarette Market Size- Retail Volume (billion sticks) 1999 99.6 2000 98.7 2001 89.3 2002 91.9 2003 94.5 2004 96.5 2005 2006 100 101.1 2007 99.8 2008 91.2 2009 90.3

The government imposed a basic excise duty of 10% and an additional excise duty of 1.6% in 2010. Source:http://www.indiabiznews.com/?q=node/1391

Contraband Cigarette Market

High excise duty on cigarettes in India The total market estimated to reach Rs 1,900 crore this year Up nearly 12 per cent from the previous year In 2010-11, the size of contraband cigarettes market in India was around Rs 1,700 crore. 17 billion cigarette sticks are smuggled into the country every year. India is the sixth highest consumer of smuggled cigarettes in the world. Source: http://articles.economictimes.indiatimes.com/2012-0115/news/30629691_1_cigarettes-filter-high-excise-duty

Indian Cigarette Pie

Sales %

8% 8%
ITC

12%

Godfrey Phillips
VST GTC

72%

Source:http://articles.economictimes.indiatimes.com/2012 -01-15/news/30629691_1_cigarettes-filter-high-excise-duty

Source:http://articles.economictimes.indiatimes.com/2012-0115/news/30629691_1_cigarettes-filter-high-excise-duty

Industry Structure
With the FDI in the Indian tobacco industry now banned by the Indian Government Leading domestic companies will have greater advantages in terms of their financial positions and distribution networks.

Multinational players will be forced to remain minor players as they will be unable to invest further either in their own subsidiaries
Limiting the possibility for the global tobacco giants to expand the presence of their leading global cigarette brands in India during the forecast period. Source: http://www.euromonitor.com/cigarettes-in-india/report