TOBACCO INDUSTRY

-Kunika Singhal

CONTENTS Overview History Type of Industry Nature of Industry Sub Industries Export Major Companies SWOT Analysis Product Line Future Strategy Political Issues

OVERVIEW OF INDUSTRY•The Tobacco Industry is a set of corporations

that grow, sell and distribute tobacco and related products throughout the world. •Barriers to entry in this industry are relatively high, though, due to govt restrictions on marketing and advertising. Therefore, a small number of companies serve this market. • Tobacco Industry is now mainly focusing on young adults.

HISTORY

Tobacco cultivation has a history of about 8000 years.Europeans were introduced to tobacco when Columbus landed in America in 1492.Portuguese traders introduced tobacco in India during 1600. Tobacco became a valuable commodity in barter trade and its use spread rapidly.Gradually tobacco got assimilated into the cultural rituals and social fabric due to presumed medicinal and actually addictive properties attributed to it.

Tobacco Industry falls under the primary industry as it comprises those persons and companies engaged in the growth, preparation for sale, shipment, advertisement, and distribution of tobacco and tobacco-related products.

TYPE OF INDUSTRY

NATURE OF INDUSTRY

India is the third-largest tobacco producer in the world, with annual production of about 800 million kgs. The major exportable variety, Flue Cured Virginia (FCV) tobacco, is produced mainly in Andhra Pradesh and Karnataka, with production in 2014–15 totalling 297 million kgs. This has led to India emerging as a leading exporter of FCV tobacco globally.

SUB –INDUSTRIES Leaf Tobacco Industry : The Leaf Tobacco Industry is involved in the growing & ageing of leaf tobacco.

Tobacco Products Industry :It includes the manufacturing of commodities,mostly cigarettes fine cut tobacco, for final consumption.

Exports of Indian Tobacco rose at a CAGR of 9.0 per cent to US$ 918.9 million in 2014–15 from US$ 502.2 million in 2007–08. In 2014–15, India exported 246 million kgs of tobacco and tobacco products. India ranks third in terms of production of tobacco and in exports, after Brazil and the US. Indian tobacco is exported to about 100 countries. India exports unmanufactured tobacco primarily to Western Europe, South and Southeast Asia, East Europe and Africa. Western Europe is the key market for Indian tobacco exports.

EXPORT

ITC A-One Beedi Azad Bidi Kanhayya Tobacco Co. Ltd Kothari Products Limited (KPL) M.R Tobacco Pvt Ltd Sapna Enterprises Sri Jayalakshmi Tobacco Co Ltd Tej Ram Dharam Paul

MAJOR COMPANIES

SWOT ANALYSISStrengths1.Distribution network well in place.2.Variety of Brands.3.Most companies are financially sound.4.Addictive in nature.

Opportunities.1.International market.2.Market penetration.3.Women’s market.4.Cigarettes to bidi making which is bigger.

.

Threats.1.Declining market.2.Heavy taxes and duties.3.Growing anti-smoking movement.4.Entry of global brands.5.New government restrictions.6.World Health Organization

Weakness1.Hazardous Product.2.Causes various forms of cancer.3.Social Taboo.

Cigarettes Pan Masala Mouth Freshners

Bidis ChuttaKretek

PRODUCTS

Khaini Mawa

Nasal Snuff

Tobacco companies have designed their products to attract new users, almost all of whom are children. Their internal documents discuss ways of reducing the harshness of their products and how to make them more appealing to new users, especially with the use of flavorings. With their colorful packaging, various flavors, and frequent placement near candy displays in retail outlets, cigars can easily be mistaken for candy by adults and children alike.

FUTURE STRATEGY

Tobacco is used by the youth all over India with a wide range of variation among states.Two in every ten boys and one in every ten girls use a tobacco product.Initiation to tobacco products before the age of 10 years is increasing.There are currently about 240 million tobacco users aged 15 years and above (195 million male users and 45 million female users) in India.

TOBACCO USE AMONG YOUTHTobacco industries are mainly focusing on Youngsters due to following reasons:

Ban on smoking in public places(including indoors).Ban on direct and indirect advertising of tobacco productsBan on sales to minors

- Tobacco products cannot be sold to children <18 years- Tobacco products cannot be sold within a radius of 100 yards of

educational institutionsPictorial health warningsEnglish and one or more Indian languages to be used for

health warnings on tobacco packsTesting and Regulation: Ingredients to be declared on

tobacco product packages (Tar and Nicotine)

INDIAN LAW-AT A GLANCE