The Cigarette Industry is one of the oldest industries in India (almost 100 years old). It is an important agro-based industry. It is highly labor intensive and provides livelihood to about thirty million people directly and indirectly. India's tobacco industry is one of the largest in the world, with India having the second largest area planted to tobacco leaf after China. Furthermore, India's production of leaf is only exceeded only by China and the USA. The tobacco industry in India is quite complex when compared to the nature of the industry in many other countries. The particular features that distinguish the Indian industry are the existence of three district consumer markets for tobacco products, each of which comprises approximately one third of the national market for tobacco products. One a consumer market is formed by what is called the 'organized sector' and is based on filter tipped cigarettes; a second consumer market exists in what is called the 'unorganized sector' and this is for bidis; the third consumer market also exists in the 'unorganized sector' and this includes chewing tobacco, smokeless tobacco and a number of other forms of tobacco products.
Tags: Analysis of Indian cigarette industry, Trends in Indian cigarette, Indian cigarette export, Indian cigarette market, Indian tobacco market
[...] It is essentially a “follow the leader” strategy. The non-price competition among the players. Looking at criteria like after sale service, discount offers, sales etc, it can be said that in the cigarette industry there is no non-price competition amongst the players, other than promotional methods. Market structure Oligopoly. Consumer preferences Are fixed. Consumers tend to be fiercely brand loyal. Price increases tend not to bother them. Mostly they identified their choice as one of taste and smoothness of the tobacco in the cigarette they smoke. [...]
[...] The share of cigarettes in the total consumption has been declining year after year and has gone down to a mere 14% as against an average of 86% in the rest of the World Cigarette sales have been adversely affected by rising excise duties and legislation against public smoking. There has been a movement in consumption patterns towards smokeless tobacco. Smoking is being gradually curbed in public places. There is growing health consciousness among the premium cigarette smokers Trend of demand of cigarettes: - Demand: Past & Future Year Bn pieces 1990-91 78.5 1991-92 81 1992-93 84 1993-94 87 1994-95 90 1995-96 97.9 1996-97 104.2 1997-98 108.1 1998-99 101.8 1999-00 99.3 2000-01 101.8 2001-02 102.2 2002-03 103.5 2003-04 104.8 2004-05 106 2005-06 107.2 2006-07 108 2011-12 108 Players: - There are four major players who control 99% of the market in India ITC (Indian Tobacco Company) GPI (Godfrey Phillips India) VST (Vazir Sultan Tobacco) GTC (Golden Tobacco Company). [...]
[...] These learning's provide an insight into some aspects of the cigarette industry that were hitherto unknown to us. These learning's might also prove useful to the various players in this industry; hence, they are being noted here for reference Customers are fiercely brand specific and loyal, thus, changing customers' brand preferences is very tough. Hence, any new brand that is launched takes time to find acceptance. The decreasing number of smokers and prospective smokers in India worsens the situation. Thus, for faster product trial and market penetration it is suggested that new brands not be launched in the rather they should be aligned with an already existing and well-known brand. [...]
[...] 4.) Market Structure: - With four large manufacturing firms, the market structure of the cigarette industry is one of oligopoly . An oligopoly exists when a few companies dominate an industry. This concentration often leads to collusion among manufacturers, so that prices are set by agreement rather than by the operation of the supply and demand mechanism. For an oligopoly to exist, the few companies do not need to control all the production or sale of a particular commodity or service. [...]
[...] APPENDIX Questionnaire for Consumer Survey Dear Respondent, We thank you for sparing your valuable time in filling this questionnaire and helping us in our attempt to study the cigarette Industry in India. We assure you that the information collected through this survey would be used strictly for academic purpose Section-“A” Name: - Address: Occupation: Number: Age Group: 18-22 22-26 26-30 30 and above Section Ques Do You Smoke? o YES (continue) o NO Ques: 2 If ‘YES' would you call yourself a o Chain Smoker o Occasional Smoker o Regular Smoker. [...]
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