1. ITC to counter illegal cigarette market with a pack of new brands: Kurush Grant, Executive Director
Writankar Mukherjee, ET Bureau Aug 28, 2012, 06.18AM IST
(ITC Executive Director…)
It is not common for an ITC top executive to talk about the FMCG-to-hospitality major's largest revenue generator, the cigarette business. However, ITC Executive Director Kurush Grant-who oversees its FMCG businesses including cigarettes and is one of the three directors who are considered frontrunners to succeed YC Deveshwar as ITC chairman-says that the company is determined to fight the illegal industry. ITC is test-marketing a portfolio of new cigarette brands such as Flake Deluxe, Scissors ...view middle of the document...
These illegal cigarettes are manufactured by local producers who do not pay tax, and the money goes into the hand of mafia who fund anti-social activities. It is here ITC is pitching the new cigarette brands, which are launched in the sub-65 mm segment after the government recently provided some tax differential in this segment. We hope to beat the illegal cigarette industry, which sells inferior products.
Do you expect new brands to boost ITC's cigarette business volumes, especially when states have raised taxes?
We are selling the sub-65 mm cigarettes at around Rs 2 per piece, which are competitively priced as compared to the illegal industry. These brands should help our business, since it is only the bottom and top-end of the market which are growing. However, the increase in taxation on cigarettes is a concern and it can indeed impact our volume growth. We are worried, but as of now we are doing well.
Cigarettes contribute over 74% of tax revenue, while accounting for less than 15% of tobacco consumption. In fact, non-filter cigarettes are cheaper than bidi without taxes. Unless government recognizes this anomaly, consumers will go for cheaper forms of tobacco. For instance, chewing tobacco has become the largest form of tobacco intake due to this taxation structure.
Can the non-cigarette FMCG business break even before the target of 2017?
ITC's non-cigarette FMCG business has been judged as the fastest growing FMCG business in India by Nielsen. We have recently revamped the entire product portfolio by launching a richer and premium variant at each level.
2. ITC aims to smoke out rivals with 64mm cigarettes
Aug 29, 2012, 08.27 AM IST
Cigarettes to FMCG to hotels major ITC has been very aggressive in the FMCG space in recent times, with a slew of personal care and food products launched, backed up by a strong advertising push. However, its mainstay still remains cigarettes and it is here that it aims to shake up the market with a new 64mm cigarette.
Cigarettes to FMCG to hotels major ITC has been very aggressive in the FMCG space in recent times, with a slew of personal care and food products launched, backed up by a strong advertising push. However, its mainstay still remains cigarettes and its here that it aims to shake up the market with a new 64mm cigarette.
The company has test launched the 64mm cigarette, under the Capstan brand, priced at Rs 2 per stick and Gold Flake at Rs 2.5, in June, to take on the unorganised market, where cheap local brands as well as many illegal ones are sold at as low as Rs 1. The 40% tax differential between 64mm and the usual 69mm cigarettes was also another key reason for ITC's move.
After testing the 64mm cigarettes in Uttar Pradesh and Bihar, the company is now set to launch it nationally. Some analysts say the company is already testing the cigarette in several states apart from Bihar and UP.
Media reports quoting Hemant Malik, COO, Trade, Marketing & Distribution, said...