Competitive research on market size of cigarette brands

Type :

Research papers

Pages :

33 pages

Format :

.doc

Published date :

05/30/2009

Category :

Business & market

Sub category :

Business strategy

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Summary :

Introduction
The tobacco industry in India
1. Industry background
2. Recent happenings and its impact on the industry
3. Annual per capita adult cigarette consumption
4. Woes of the tobacco industry
The present scenario
Company profile
1. ITC's diversified status
2. Key points
3. History of ITC Ltd
4. The core competencies
The major Competitors of ITC Ltd
Business diversification
1. Cigarettes/ tobacco
2. Specialty paper and hotels
Earnings sensitivity factors
Financial review: A research
SWOT analysis of ITC Ltd
Market survey and interpretation of the survey
1. Findings from the survey
2. Recommendations and limitations
Conclusion
Bibliography

Abstract

The cigarette industry in India is dominated by 4 players - ITC, Godfrey Phillips, VST (also a BAT affiliate) and GTC. These four companies together control almost 99% of the market. The cigarette industry faces competition mainly from the unorganized sector 'bidi' manufacturers, who are protected from high duties due to small-scale industry status. Affected by steep duty hikes, the industry has been facing stagnant volume growth in the last 2-3 years. cigarette sales dropped by 4% in volume terms in FY00. The 2000-01 budget also hiked excise on all types of cigarettes by 5%.

Based on the contribution form various products, ITC's business can be divided into three main divisions, namely cigarettes, tobacco and agri-products. ITC's mainstay of earnings is cigarettes (87%) and tobacco (3%). Agri-products business contributes 5% of the total Rs80bn revenues, while other businesses of hotels, paper and packaging collectively contribute the balance 5%.

Tobacco today is the largest contributor to Indian excise collections. Despite that the industry has been getting step-motherly treatment by the central government. The industry has been facing regular increase in excise duty on cigarettes in every budget for past so many years. The cigarette industry in particular has been suffering both at the hands of central government as well as state governments. In CY12/00 also the cigarette industry was again made a scapegoat and a proposal for additional levy of 1% on cigarette manufacturers was made to pay for the lackadaisical approach of government regarding unregulated tobacco crop. Last year (CY12/00) a number of big events like crop holiday for the current year, proposals of additional levy on cigarettes etc. dominated the industry scenario.