Cigarette Marketing and Distribution

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A peek into the cigarette industry, from a marketing and distribution point of view. The challenges faced, taxation, etc.

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  • We are looking for Cigarette Distributors and Wholesalers in India. Please contact me at : jcheuk@parlink-international.com
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  • want to launch new cigarette company in odisha, pls contact me on my mob--09437071559 and mail id--ramaradhe@yahoo.co.in
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  • i need all cigrete distributor and marketing so plz contact mi my name is rahul dubey 8155026133 dubeyrahul842@gmail.com ...i m, frome ahemdabad gujrat
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  • This is Request to you that i want to take all cigarette's Distribution and Marketing in jhunjhunu Rajasthan, kindly inform me as soon as early this is my Maill Id : maheshsaini06101990@gmail.com
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  • This is Request to you that i want to take all cigarette's Distribution and Marketing in jhunjhunu Rajasthan, kindly inform me as soon as early this is my Maill Id : maheshsaini06101990@gmail.com
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Cigarette Marketing and Distribution

  1. 1. Akshay AryaAmeya WaghmareNaveen KumarSiddhesh Brid
  2. 2. Cigarette Industry in India• Cigarettes can be classified as Value-Routine products• The tobacco posted 24% growth in other- than-cigarette division and only 5% growth from cigarettes division. (Source: Moneycontrol)• India is the second largest manufacturer of cigarette products in the world after China (Source: Tobacco Board)
  3. 3. Cigarette Industry in India• In spite of being the second biggest producer, India is only the ninth exporter of tobacco (Source: Tobacco Board)• The use of cigarettes in India is merely a tenth of the world average. (Source: World Health Organization)• India’s consumption per capita stands at 99th place in the world (Source: World Health Organization)
  4. 4. Tobacco Consumption by Geography
  5. 5. Cigarette Market ShareITC Godfrey Phillips Vazir Sultan Tobacco Company Others 8% 8% 12% 72% Source: Businessworld
  6. 6. Major Companies in India
  7. 7. Trends in Cigarette Retailing• Pictorial Warnings on packaging getting negative response from manufacturers• Ban on Advertising• Ban on FDI in Indian Tobacco Industry• Paan shops remain the most important distribution channel
  8. 8. Distribution of Cigarettes Dealers/Factories C&F Agents Distributors Retailers Wholesalers
  9. 9. Factories • Bengaluru • Kolkata • Munger (Bihar)ITC • Saharanpur • Ghaziabad • Andheri (Mumbai)GPI • Baramati
  10. 10. Distributors• No. of distributors depends on the demand• They provide warehousing for the goods• Handle volumes of up to Rs. 5-6 Crore/Month• An Assistant Manager along with 1-2 sales assistants on the payroll of ITC/GPI is present• Sales teams are paid and managed by the distributors• All transactions are cash and carry
  11. 11. Dealers/WholesalersDistributors Retailers
  12. 12. Dealers/Wholesalers• Very important members of the distribution channel• Deal in Tobacco, not just cigarettes• Drive large volumes of sale• Inject credit into the system• Have their own storage• Supply to large/small retailers and paan shops• Often buy large amounts based on speculation
  13. 13. Small Retailer (Pan Shop)•Sells 15-20 packs a day•Makes a margin of about Rs.10-20 per pack•Procures cigarettes from a dealer on daily basis Large Retailer •Gets his goods from the company distributors directly •The goods come to his shop via the sales team •Cash and Carry •Point of Purchase displays Super stores and Hypermarts • Sell larger packs (Bingos)
  14. 14. Transport for Distribution
  15. 15. Warehouse
  16. 16. Retail Margins Margin / Description Cost Rs. Taxes Rs. To Cost of Manufacturing 0.59Cost Including Excise and VAT and State taxes 3.57 500.00% 2.97 Government Cost to Distributor 4.75 25.00% 1.19 CompanyCost to Dealer/Wholesaler 4.80 1.00% 0.05 Distributor Cost to Retailer 4.95 3.00% 0.15 WholesalerCost to Consumer (Packet) 5.50 10.00% 0.55 RetailerCost to Consumer (Loose stick) 7 29.29% 2.05 Retailer
  17. 17. Sales Promotions• Various schemes are introduced for Dealers and retailers• Get 1 pack for 10 empty packs• Cash Discounts• Trip to Singapore/Malaysia on sale of Rs. 5-6 Lakhs• In case of low sales from any area, the marketing team may take appropriate actions
  18. 18. Advertising
  19. 19. Advertising• Advertising of cigarettes is banned• Sponsoring youth events is banned• Surrogate advertising likely to be banned in near future• Advertising PoP (Point of Purchase) is the only viable option
  20. 20. PoP Advertising• The brand name of a cigarette in bright lights along with the name of ‘paan shop’ at prominent locations• The key shelf space which is easily visible to customers is used for displaying the brands
  21. 21. Red and White BraveryPoP Advertising Awards, Surrogate Advertising
  22. 22. Damaged/Unsold Stock• Cigarettes have a shelf life of 3-6 months as they are highly hygroscopic• All damaged or unsold goods are bought back by the company and sent to the factories• The tobacco is extracted and processed by casing which enhances the flavor• New cigarettes are now produced using the tobacco

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