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An overview of the Indian cigarette industry

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  1. Introduction
  2. Research objectives
  3. Research methodology
  4. An analysis of the cigarette industry in India
    1. Consumer questionnaire analysis
    2. Retailer questionnaire analysis
    3. Objective wise analysis
  5. Appendix
  6. Recommendations
  7. Bibliography
  8. Conclusion

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). [...]

[...] After Sale Service: Being a fast moving product category the cigarette industry doesn't has any scope of any after sale services as once the pack is opened up the scope of after sale service is out of question. Though in certain cases the services may be provided to the vendor. These cases indirectly are benefits to the consumers as no sub standards products reach the consumer. Incase of expensive cigarette brands like Marlboro when the cigarette packs remain unsold for over six months, then those packs are taken away by the representative of GPI through the wholesalers. [...]

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