Itc-Why Small Cigarettes Have Been Launched Essay
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 Deluxe, Bristol Deluxe, Gold Flake Superstar and …show more content…
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