A Brief On Cigarette Industry with an Indian Context.

History of Tobacco 

 Tobacco was first discovered by the native people of Mesoamerica and South America and later introduced to Europe and the rest of the world.Tobacco had already long been used in the Americas by the time European settlers arrived and took the practice to Europe, where it became popular. Eastern North 

American tribes have historically carried tobacco in pouches as a readily accepted trade item, as well as smoking it in pipe ceremonies, whether for sacred ceremonies or those to seal a treaty or agreement .

The Japanese were introduced to tobacco by Portuguese sailors from 1542 which led to introduction of tobacco in Asia

Tobacco first arrived in the Ottoman Empire in the late 16th century,where it attracted the attention of doctors and became a commonly prescribed medicine for many ailments. Although tobacco was initially prescribed as medicine, further study led to claims that smoking caused dizziness, fatigue, dulling of the senses, and a foul taste/odour in the mouth.

World cigarette industry: A Brief Prespective

The global cigarette market reached a value of USD 960.69 billion in 2020. The market is further expected to grow at a CAGR of 3.3% between 2021 and 2026 to reach a value of almost USD 1130.02 billion by 2026.Philip Morris is the world's largest transnational tobacco company, whose Marlboro brand is the world leader. In 1999 the company had sales of over US$47 billion. However, excluding the US domestic market, BAT sells the most cigarettes worldwide and has the largest network in the most countries.Whenever we hear the term cigarette, the first thing that strikes is that caution warning printed on every cigarette box. Although smoking is harmful to our health, it has also been proved experimentally people still love cigarette and cannot get rid of it due to the addictive property of nicotine. Smoking is one of the most common forms of refreshment drug use in India. Tobacco smoking is the most common form, being practised by one billion people in entire world. Smoking cigarette comes from centuries ago while people started experimenting on tobacco plants and found its addictive property. The scientific name of tobacco plant is “Nicotina Tobacam”. Dried leaves of this plant are rolled to make cigarette or bidi which are smoked by the smokers. It is said that smoking gives smokers a kick which makes them smoke again and again.

After China, India is the second biggest producer of tobacco in the world. Currently, India is exporting tobacco to eighty nations around the whole world. In recent years many new brands are coming up with new ways to present tobacco to a growing amount of anti-tobacco groups. These brands provide deluxe and expensive cigarettes and other tobacco-related consumables. Prices of these cigarette packets (Approx 20 cigarette per pack) can range anywhere from 50 Indian rupees per pack (approximately $0.9) to 3000 Indian rupees or even more. These prices depend upon production cost, advertisement and material used in the particular cigarette.

 

1. East Asian countries have most addicted males as smokers.
2. European females rank highest smokers in the world
3. African females rank lowest as smokers vs men
4. China tops followed by India in no of smokers in the world.

Most Expensive Cigarette Brands in The World	Company
Marlboro	PhilipMorris
David	Imperial tobacco
Camel	Camel
Parliament	PhilipMorris
Dunhill	B.A.T
Lucky Strike	A.T.C
Pall Mall	R.J Reynolds Tobacco Co.
Benson & Hedges	PhilipMorris
Insignia	ITC

Cigarette Market In India 

1. India is the third largest producer of tobacco in the world.
2. Tobacco occupies a prime place in Indian economy on account of its considerable contribution to the agricultural,industrial and export sectors
3. The oldest cigarette manufacturing was established around1887 and by 1930 industry spread across country.
4. First pvt co to set up was Imperial Tobacco Company.

Tobacco Cos.	Brands
ITC	Gold Flake, Navy Cut, Scissors,Classic
GPI	Red & White, Four Square, Cavanders
VST	Charms,Charminar,Moments,Gold

Oligopolistic Market in India

The market share controlled by group of largest competitors . The concentration ratio is very high 90.8% if we compare 2 major entry players and 98.3% if we consider top 3 players.

Company Name	Last Price	% Chg	52 wk High	52 wk Low	Market Cap (Rs. cr)
ITC	234.25	1.85	234.25	134.95	2,88,253.10
VST	3,618.10	0.02	4,510.75	2,550.00	5,587.04
Godfrey Phillip	934.90	-2.59	1,408.40	732.40	4,860.91
The Indian Wood	34.90	9.92	44.00	19.20	223.26
Golden Tobacco	47.50	-2.56	60.00	18.00	83.64
NTC Industries	48.50	1.36	54.00	16.00	52.14

Cigarette consumption trends in India 

India has over 100 million adult smokers , the second highest number smokers in the world after china.

The age standardised prevalence of smoking declined modestly among men aged 15-69 years, but the absolute number of male smokers at these ages grew from 79 million in 1998 to 108 million in 2015,this is probably due to population offsetting modest declines in prevalence.

Cigarettes are displacing Bidis , female smoking at ages 15-69 has not risen

Cigarette demand continues to decline by 5%

Cigarette remains a Oligopoly market structure, with ITC & GPI the leading manufacturers 

Cigarette demand in India

India has a unique pattern of tobacco consumption with Legal Cigarettes accounting for just 9% of overall tobacco consumed. The combined tax revenue collected from tobacco products is more than Rs. 43,000 crores annually. Legal Cigarettescontribute 80% of tax revenue despite just 9% share of tobacco consumption.The total market size of Cigarette trade in India is117,857 Crores

The tax revenue from cigarettes across India in fiscal year 2019 was approximately 348 billion Indian rupees, an increase from previous fiscal years. 

What is the future of tobacco industry?

There are roughly one billion smokers in the world who are responsible for the purchase of 5.4 trillion cigarettes each year – but with the World Health Organization aiming for a 30% reduction by 2025, the future of the tobacco industry could be decided on whether it can cope with losing almost a third of its market.