Tobacco in India

Euromonitor International's Tobacco in India market report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data, allowing you to identify the sectors driving growth. It identifies the leading companies, the leading brands and offers strategic analysis of key factors influencing the market - be they new product developments, packaging innovations, economic/lifestyle influences, distribution or pricing issues. Forecasts illustrate how the market is set to change.

Buy online to access strategic market analysis and an interactive statistical database of duty paid retail volume and value sales, illicit trade volume, company and brand shares, pricing, distribution and production data.

Why buy this report

• Get insight into trends in market performance
• Pinpoint growth sectors and identify factors driving change
• Identify market and brand leaders and understand the competitive environment

Product coverage

Cigarettes; Cigarettes including RYO; Cigars; Smoking tobacco

Executive summary

Tax whip cracked harder

Continuing with a policy to control smoking, the tax measures became harsher in 2007, with an increase of 6% in excise and an additional 12.5% in VAT, bringing the total effective tax to about 20% (although the most populous state, Uttar Pradesh, imposed 32.5% VAT). As expected, volume sales declined due to the subsequent price rises. ITC Group, the leading company, is estimated to have taken price hikes as high as 20% on some brands. The industry expected a volume decline of 5%-10%, but the overall industry declines have been lower than expected, reflecting consumer resilience to price rises.

Cigarettes – so many challenges

The government has put severe regulatory restrictions of all types on cigarettes to restrict sales and reduce smoking prevalence. Apart from consistent rises in taxes each year on cigarettes, there is also a total ban on advertising and promotion, a ban on smoking in public, and also in films, a ban on sale to minors, and there are impending graphic health warnings on packs in 2008. Moreover, the domestic industry also faces threats from imports and smuggled cigarettes. Although imports constitute only a negligible proportion of the domestic pie, their rising share poses a threat to players.

Graphic pack warnings – finally to be implemented by mid 2008

Under the provisions of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003, (COTPA) and rules 2006, companies will have to display pictures of the potential health dangers of smoking cigarettes, such as oral cancer and lung cancer. This is a powerful measure which will have a strong downward effect on volume sales. The rule was proposed in 2006, but was strongly resisted by the cigarette lobby, and is currently being reviewed by the government once again. Preliminary decisions to implement the pack warnings were finalised in February 2008, and only the final details on the pictures to be used are being discussed; final rules are expected to be announced soon. The industry is fearful that this may have a negative impact on volume sales.

Despite regulatory controls, underlying factors for cigarette growth are strong

Despite all the regulations, cigarettes in India continued to see small growth in the past five years (except in 2007 when it declined). While FY08 is expected to see declines due to the unusually high taxes in 2007, it is expected to rebound in FY09 due to strong long term core factors. India is demographically very attractive. 65% of the population is below the age of 35; potentially this is a big segment of younger consumers with rising disposable incomes and a lower aversion to smoking. Moreover, India has a low per capita cigarette consumption (141 sticks) compared with the global average. Players are optimistic about these favourable demographics and growing income trend.

Cigar culture grows

Cigars is still a nascent category in India, but rapidly growing. Cuban cigars have become the trendiest prop for politicians, businessmen and even young society men and women as the hottest object to flaunt. Within the premium segment Cohiba and Partagás dominate, while Phillies is the most popular mid-priced brand. Cigar lounges have spread rapidly in all leading cities in five star hotels and up-market bars and pubs, and these offer select membership and provide elite personalised services to their members. Key names include Le Royal Meridien in Mumbai (‘Cigar Divan’), Leela Hotel in Bangalore (‘Cigar Room’) Taj Residency’s Café Mosaic and Cohiba Club. The signature store chain for Cuban cigars, ‘Casa del Habanos’ is to be launched in 2008.

Table of contents

TOBACCO IN INDIA : MARKET INSIGHT

EXECUTIVE SUMMARY

Tax whip cracked harder

Cigarettes – so many challenges

Graphic pack warnings – finally to be implemented by mid 2008

Despite regulatory controls, underlying factors for cigarette growth are strong

Cigar culture grows

OPERATING ENVIRONMENT

Smoking Prevalence

Table 1 Smoking Prevalence in Population 2002-2007

Table 2 Number of Smokers by Gender 2002-2007

Death by Cause

Legislation

Litigation

Taxation and Duty Levies

Table 3 Cigarettes Taxation 2001-2007

Beedi

Chewing tobacco

Production/Imports/Exports

Table 4 Trade Statistics – Cigarettes

The Role and Effect of Cannabis/Marijuana

MARKET INDICATORS

Table 5 Illicit Trade Estimate 2002-2007

MARKET DATA

Table 6 Sales of Tobacco by Sector: Volume 2002-2007

Table 7 Sales of Tobacco by Sector: Value 2002-2007

Table 8 Sales of Tobacco by Sector: % Volume Growth 2002-2007

Table 9 Sales of Tobacco by Sector: % Value Growth 2002-2007

Table 10 Sales of Cigarettes by Distribution Format: % Analysis 2002-2007

Table 11 Forecast Sales of Tobacco by Sector: Volume 2007-2012

Table 12 Forecast Sales of Tobacco by Sector: Value 2007-2012

Table 13 Forecast Sales of Tobacco by Sector: % Volume Growth 2007-2012

Table 14 Forecast Sales of Tobacco by Sector: % Value Growth 2007-2012

DEFINITIONS

Source

Summary 1 Research Sources

LOCAL COMPANY PROFILES - INDIA

GODFREY PHILLIPS INDIA LTD - TOBACCO - INDIA

STRATEGIC DIRECTION

KEY FACTS

Summary 2 Godfrey Phillips India Ltd: Key Facts

Summary 3 Godfrey Phillips India Ltd: Operational Indicators

COMPANY BACKGROUND

PRODUCTION BY FACTORY

Summary 4 Godfrey Phillips India Ltd: Production Statistics by Factory (sticks)

COMPETITIVE POSITIONING

Summary 5 Godfrey Phillips India Ltd: Competitive Position 2007

GTC INDUSTRIES LTD - TOBACCO - INDIA

STRATEGIC DIRECTION

KEY FACTS

Summary 6 GTC Industries Ltd: Key Facts

Summary 7 GTC Industries Ltd: Operational Indicators

COMPANY BACKGROUND

PRODUCTION BY FACTORY

COMPETITIVE POSITIONING

Summary 8 GTC Industries Ltd: Competitive Position 2007

ITC GROUP - TOBACCO - INDIA

STRATEGIC DIRECTION

KEY FACTS

Summary 9 ITC Group: Key Facts

Summary 10 ITC Ltd: Operational Indicators

COMPANY BACKGROUND

PRODUCTION BY FACTORY

Summary 11 ITC Group: Production Statistics by Factory (sticks)

COMPETITIVE POSITIONING

Summary 12 ITC Ltd: Competitive Position 2007

VST INDUSTRIES LTD - TOBACCO - INDIA

STRATEGIC DIRECTION

KEY FACTS

Summary 13 VST Industries Ltd: Key Facts

Summary 14 VST Industries Ltd: Operational Indicators

COMPANY BACKGROUND

PRODUCTION BY FACTORY

COMPETITIVE POSITIONING

Summary 15 VST Industries Ltd: Competitive Position 2007

CIGARETTES IN INDIA

HEADLINES

TRENDS

Illicit trade (Cigarettes)

Cigarettes: Price Bands

Cigarettes: Filter Splits

Cigarettes: Pack Splits

Distribution

COMPETITIVE LANDSCAPE

New Product Developments

Summary 16 Cigarettes: New Product Launches 2007

PROSPECTS

SECTOR DATA

Table 15 Sales of Cigarettes by Tar Level: Volume 2002-2007

Table 16 Sales of Cigarettes by Tar Level: Value 2002-2007

Table 17 Sales of Cigarettes by Tar Level: % Volume Growth 2002-2007

Table 18 Sales of Cigarettes by Tar Level: % Value Growth 2002-2007

Table 19 Sales of Cigarettes by Price Band: % Volume Breakdown 2002-2007

Table 20 Sales of Cigarettes by Standard/Menthol: % Volume Breakdown 2002-2007

Table 21 Sales of Cigarettes by Tobacco Type: % Volume Breakdown 2002-2007

Table 22 Sales of Cigarettes by Filter Vs Non-filter 2002-2007

Table 23 Sales of Filter Cigarettes by Carbon Vs Non-carbon 2002-2007

Table 24 Sales of Cigarettes by Length 2002-2007

Table 25 Sales of Cigarettes by Regular/Slim 2006-2007

Table 26 Sales of Cigarettes by Pack Size 2002-2007

Table 27 Sales of Cigarettes by Pack Type 2002-2007

Table 28 Cigarettes Company Shares 2003-2007

Table 29 Cigarettes Brand Shares 2004-2007

Table 30 Forecast Sales of Cigarettes by Tar Level: Volume 2007-2012

Table 31 Forecast Sales of Cigarettes by Tar Level: Value 2007-2012

Table 32 Forecast Sales of Cigarettes by Tar Level: % Volume Growth 2007-2012

Table 33 Forecast Sales of Cigarettes by Tar Level: % Value Growth 2007-2012

Table 34 Forecast Sales of Cigarettes by Price Band: % Volume Breakdown 2007-2012

Table 35 Forecast Sales of Cigarettes by Standard/Menthol: % Volume Breakdown 2007-2012

Table 36 Forecast Sales of Cigarettes by Tobacco Type: % Volume Breakdown 2007-2012

Table 37 Forecast Sales of Cigarettes by Filter Vs Non-filter 2007-2012

Table 38 Forecast Sales of Filter Cigarettes by Carbon Vs Non-carbon 2007-2012

Table 39 Forecast Sales of Cigarettes by Length 2007-2012

Table 40 Forecast Sales of Cigarettes by Regular/Slim 2007-2012

Table 41 Forecast Sales of Cigarettes by Pack Size 2007-2012

Table 42 Forecast Sales of Cigarettes by Pack Type 2007-2012

CIGARS IN INDIA

HEADLINES

TRENDS

COMPETITIVE LANDSCAPE

New Product Developments

PROSPECTS

SECTOR DATA

Table 43 Sales of Cigars by Subsector: Volume 2002-2007

Table 44 Sales of Cigars by Subsector: Value 2002-2007

Table 45 Sales of Cigars by Subsector: % Volume Growth 2002-2007

Table 46 Sales of Cigars by Subsector: % Value Growth 2002-2007

Table 47 Company Shares of Cigars Exluding Cigarillos 2003-2007

Table 48 Brand Shares of Cigars Exluding Cigarillos 2004-2007

Table 49 Forecast Sales of Cigars by Subsector: Volume 2007-2012

Table 50 Forecast Sales of Cigars by Subsector: Value 2007-2012

Table 51 Forecast Sales of Cigars by Subsector: % Volume Growth 2007-2012

Table 52 Forecast Sales of Cigars by Subsector: % Value Growth 2007-2012

SMOKING TOBACCO IN INDIA

HEADLINES

TRENDS

COMPETITIVE LANDSCAPE

PROSPECTS