Study of Consumer’s Smoking

Patterns

SUBMITTED BY:

SAHIL KWATRA
ENROLLMENT NO:-09BS0001998
ICFAI BUSINESS SCHOOL, GURGAON

MANAGEMENT RESEARCH PROJECT

 A REPORT
ON

Study of Consumer’s Smoking Patterns

FACULTY GUIDE:

Prof. PC VERMA

BY

SAHIL KWATRA

Enroll. No. 09BS0001998

ICFAI BUSINESS SCHOOL, GURGAON

INTRODUCTION
The project aims at studying the smoking patterns of consumer’s along different age
groups and different income groups and evaluating overall consumer behavior .
 Since smoking has become a habit for many, therefore, the project aims at
understanding the consumer’s behavior regarding how different factors like price rise in
cigarettes, change in income, age groups etc. affect the change in consumer behavior
towards smoking. The factors that differentiate one consumer from other can be:

 Income Levels
 Age Groups
 Profession/Business
 Brand of cigarettes
 Family Members smoking habits

The study will be conducted through a structured approach by getting the Questionnaire
filled by the consumers and analyzing the results thereafter.

Alongwith that the emphasis of the project would be laid on understanding about the
Cigarette Industry in India, The SWOT analysis of the industry, Major brands in India and
across the Globe, a brief view about the Indian Tobacco industry and Government
Initiatives to control smoking in India.

OBJECTIVES
The main objective is to understand the consumer’s behavior towards smoking and
analyzing the reasons for the change in consumer’s behavior due to change in factors.

METHODOLOGY
 Understanding and studying about the Indian Cigarette industry, Major brand in India
and in the world & Overview of the Indian Tobacco Industry.
 Studying of different brand of cigarettes and tobacco manufacturing companies in India
to get an insight of Tobacco industry.
 Prepare a Questionnaire for the consumers to study their behavior towards smoking.
 Analyzing the reasons and preparing and presenting the report for the same .

LIMITATIONS OF THE STUDY:

 Since it is a sensitive topic therefore women have not been taken into
consideration.
 The opinions of the population can be biased.
TABLE OF CONTENTS
1). Introduction
a) Objective
b) Methodology
c) Limitation

2). Industry Profile

3). SWOT Analysis

4). Smoking Forms

5). List of Major Players and their Brands

6). Smoking Statistics and a report on Indian tobacco industry

7). Battle for Tobacco Control

8). References
 Indian Cigarette Industry

Evolution
 The oldest cigarette manufacturing firm was established around 1887.
 Initially under British East India Company and there after British Raj.
 First private company to set up was Imperial Tobacco now Indian Tobacco Company
(ITC).

India is the second largest producer of tobacco in the world. Tobacco occupies a prime place in
the Indian economy on account of its considerable contribution to the agricultural, industrial
and export sectors. India is one of the leading Tobacco exporting countries in the World.
Despite being the second largest producer, India is only the ninth largest exporter of tobacco
and tobacco products in the world. Out of the total tobacco produced in India, only one-third is
flue-cured tobacco suitable for cigarette manufacturing. Most of the tobacco produce is
suitable for the manufacture of chewing tobacco, bidis and other cheap tobacco products,
which have no demand outside the country. In India, three major cigarette players dominate
the market, primarily ITC with 72% market share, Godfrey Phillips with 12% and VST with 8%
share of the market.

Market Share
8% 8%
ITC
12% Godfrey Phillips
VST
GTC

72%
SWOT Analysis of the Industry

Strengths
1. One of the largest manufacturers of tobacco in terms of production.
2. Traditional item of India’s foreign trade.
3. Leading tobacco exporting countries in the world.

Weakness
1. Burden of Tobacco tax.
2. Prohibition of Direct Advertising.

Opportunities
1. Significant opportunity for cigarette industry to extent and consolidate its position in
international market due to some recent trend like withdrawal/reduction of agricultural
subsidy and escalating cost in the traditional cigarette exporting countries.

Threats
1. Various NGO’s and Forums against the use and consumption of tobacco.
2. Smuggled foreign cigarettes.
 Cigarettes: Growth potential

 Cigarettes account for only 15% of tobacco consumed in India unlike world pattern of
85% due to prolonged punitive taxation.

 Cigarettes (15% of tobacco consumption) contribute nearly 85% of Revenue to the

Exchequer from tobacco sector

 Of the 58% of adult Indian males who consume tobacco, barely 15% can afford
cigarettes

 Annual per capita adult cigarette consumption in India is approx. one tenth world
average : 85

 Future growth depends on relative rates of growth of per capita income and moderation
in taxes.

Cigarette growth potential

chew tobacco
21 %
bidis 43%
Mfg exports 2%
Un-Mfg exports
19%
Cigarettes 15%
 Smoking forms

 Beedis are the most popular smoking form of tobacco in India. Thirty-four per cent of
the tobacco produced in India is used for making beedis.
 Cigarette smoking is the second most popular smoking form of tobacco used in India.
The prevalence varies greatly among different geographic areas and subgroups such as
rural urban.
 Cigars are made of air-cured, fermented tobacco, usually in factories, and are generally
expensive.
 A cheroot is a roll made from tobacco leaves.
 Chuttas are coarsely prepared cheroots. About 3000 million pieces of chuttas are made
annually in India. Chutta smoking is widespread in the coastal areas of Andhra Pradesh,
Tamil Nadu and Orissa.
 Reverse chutta smoking is practiced extensively by women in the rural areas of
Visakhapatnam and the Srikakulam district of Andhra Pradesh.
 Dhumti is a kind of a conical cigar made by rolling tobacco leaf in the leaf of another
plant.
 Pipe smoking is one of the oldest forms of tobacco use.
 Hooklis are clay pipes commonly used in western India.
 Chillum smoking is an exclusively male practice; it is limited to the rural areas of
northern India.
 The hookah is an Indian water pipe in which the tobacco smoke passes through water
before inhalation.

Smokeless forms

 Paan consists of betel leaf with tobacco (Piper betel), areca nut (Areca catechu), slaked
lime [Ca (OH2)] and catechu (Acacia catechu).
 Paan masala contains areca nut, slaked lime, catechu and condiments, with or
without powdered tobacco. It is popular in urban areas and is fast becoming popular in
rural areas.
 List of Major Players in INDIAN CIGRATTE INDUSTRY

 ITC Limited  Vazir Sultan Tobacco

Industries Ltd. (VST)
Super Premium Products
1. Charms
1. Insignia
2. Charminar (Special
2. 555
Filter, Plain, Standard)
3. India King
4. Wills Silk Cut (King Size)

Premium Products

1. Wills Classic/Mild/Regular/Menthol /Ultra Mild

2. Wills Navy Cut(Filter Tipped)
3. Wills Navy Cut(Duotec)
4. Navy Cut(Regular Size)
5. Gold Flake(Premium)
6. Gold Flake King/Lights/Ultra Light Filter
7. Benson & hedges(light & hard)
8. Marlboro (light & hard)

Bingo Products

1. Wills Flake
2. Bristol

 Godfrey Phillips India

 Golden Tobacco Ltd. (GTL)
1. Four Square Filter
1. Panama
2. Stellar
2. Chancellor(Browns, Royale,
3. GPI Red and White
Exclusive, Harvard Luxury, Lights)
4. I-Gen
3. Golden (Gold Flake, Major)
5. Jaisalmer
4. Taj Chap
6. North Pole
5. Style Mini Kings
7. Cavanders
6. Steel (Regular & King Size)
8. Tipper
7. June( Light & Menthol Flavors)
8. Just Black
9. Lips
 List of Major Players in World CIGRATTE INDUSTRY

 China National Tobacco Corporation  Japan Tobacco

1. Hongtashan (Red Pagoda Hill) 1. Camel

2. Classic C 2. Winston
3. Classic D 3. Benson & Hedges
4. Mild Seven
 Reynolds American 5. Seven Star
6. Club
1. Camel 7. Silk Cut etc.
2. Camel Crush
3. Dakota
4. Lucky Strike
5. Salem
6. Pall Mall
7. Premier

 British American Tobacco

 Phillip Morris International

1. Kent
1. Malboro
2. Dunhill
2. L&M
3. Lucky Strike
3. Red & White
4. Viceroy
4. Parliament
5. State Express 555
5. Boston
6. Vogue etc.
6. Morven Gold
7. Next
 Imperial Tobacco 8. Diana
9. Optima etc.
1. Camel
2. More
3. Mild Seven
4. Davidoff
5. Embassy
6. John Player Special
(JPS)
7. Regal
8. Richmond
9. Superkings etc.
 Smoking Statistics

In India
A report from a Govt. Agency in India indicates an increasing prevalence of tobacco
consumption in India, with 57% males and 10.8% females reportedly consuming tobacco in
some form. This is against the general global trend.

As per the NSSO age-specific rates, regular consumers of tobacco (aged 10 year and above)
were 18.65 crore in rural India and 4.93 crore in urban areas in 2004. The state wise Global
Youth Tobacco Survey (GYTS), 2006 also indicates a decrease in the age of onset of tobacco
consumption in the age group of 13-15 years. 
Section 4 of the “The Cigarette and other Tobacco Products (Prohibition of Advertisement and
Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003” prohibits
smoking in a Public Place. 
There are studies to indicate a strong linkage between film personalities and their influence on
youth. Since a few film personalities have reportedly been violating the provisions of the Act, by
smoking at public places, they have been advised time and again to desist from such action(s). 

Across Globe
Smoking is the most wide spread addiction. Statistics show that in 90 years there have been 1.1
billion smokers in the world, among them 47% men and 12% women out of the whole
population. Only in China there are 300 million smokers, 90% men and 10% women. In the
developed countries 42% of all men and 24% of all women smoke, whereas in developing
countries approximately 48% of men and 7% of women. Per year smokers smoke about 6
million tons of tobacco in different ways (cigarettes, cigars, pipe tobacco, etc.). Consumption of
tobacco increases every day, especially in poor countries, whereas in more developed countries
it decreases, which is a result of people being more conscious of the harm caused by tobacco.
In Europe the consumption of tobacco has remained almost the same in the last 20 years, in
America it has decreased but in other countries it has been growing up very fast, especially in
west pacific region. Consumption decrease in developed countries is very similar to the increase
of tobacco consumption in developing countries. This is why an average consumption hasn't
changed (One smoke 1650 cigarettes yearly.). However, China has its own specialties. From
1970 to 1990 the consumption there has grown for about 260%.
 Average number of cigarettes smoked in one day
[per smoker]
Region Cigarettes per day
WORLD 15
Africa 10
North America 18

On average, a Asia 14 smoker smokes 15

cigarettes a day. Europe 18 People in
developed Australia 15 countries smoke
the most South America 16 cigarettes per day,
about 25. In countries with
developing economy a man smokes 14 cigarettes a day, but in ex-socialist countries of Eastern
Europe even 18. In Africa an average number of cigarettes smoked per day are 10, in America
and Europe, however, 18.

India’s Tobacco Industry Report

India’s tobacco exports surged 29% to reach Rs 4373 crore in the 2009-10 fiscal on higher
demand from Europe and the US. India is the third largest tobacco exporter in the world.

In volume terms, tobacco exports—comprising raw tobacco and its products—rose by 14% to
257469 tonnes in FY2010 from 224867 tonnes in the previous fiscal. India exported tobacco
worth Rs 4373 crore in the 2009-10 fiscal against Rs 3388 crore in the same period last year.

The export of tobacco surged as lower production in countries such as Europe and the US
boosted global demand. India shipped Rs 748.95 crore worth of tobacco products like cigarettes
and Rs 3624 crore worth of unmanufactured tobacco like flue-cured Virginia (FCV) tobacco in
FY2010. In volume terms, exports of tobacco products stood at 29,772 tonnes, while
unmanufactured tobacco shipments totaled 227697 tonnes in the review period. The shipment
of FCV tobacco, the major export variety, increased in volume to 173701 tonnes from 150174
tonnes during the period. The tobacco was exported largely to Belgium, Russia, South Korea,
the Netherlands and South Africa.

Tobacco production in the country is likely to touch 335 million kg in the 2009-10 season,
against 317 million kg in the previous year. The harvesting season varies in Andhra Pradesh and
Karnataka, the two biggest tobacco producing states in India. At present, tobacco is being
harvested in Andhra Pradesh. India holds a meager 0.7% share of the US$ 30 bn global trade in
tobacco, with cigarettes accounting for 85% of the country’s total tobacco exports.

Battle for Tobacco Control- Indian Scenario

The Government of India in 1975 enacted the Cigarettes (Regulation of Production, Supply and
Distribution) Act, which made it mandatory to display a statutory health warning on all
packages and advertisements of cigarettes. During the 1980s and 1990s, the Central and State
Governments imposed further restrictions on tobacco trade and efforts were initiated to bring
forth a comprehensive legislation for tobacco control. The Indian Parliament passed the
Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade
and Commerce, Production, Supply and Distribution) Bill, 2003 in April 2003. This Bill became
an Act on 18 May 2003. Rules related to some sections of the law were formulated and
enforced from 1 May 2004.

Indian Law at a Glance

Key provisions of the Cigarettes and Other Tobacco Products Act, 2003

 •Ban on smoking in public places (including indoor workplaces).

 •Ban on direct and indirect advertising of tobacco products.
 —Point-of-sale advertising is permitted.
 •Ban on sales to minors.
 —Tobacco products cannot be sold to children less than 18 years of age.
 Tobacco products cannot be sold within a radius of 100 yards of educational
institutions.
 •Pictorial health warnings.
 English and one or more Indian languages to be used for health warnings on tobacco
packs.
 Testing and regulation: Ingredients to be declared on tobacco product packages (tar
and nicotine).

References
 https://www.surveymonkey.com/s.aspx?sm=PQfzLfBvcf7nIO3pl9gh/g%3d%3d
 http://library.thinkquest.org/17360/text/tx-e-pod.html
 http://www.moneylife.in/article/8/5082.html
 http://www.tobacco-facts.net/tobacco-industry/india-tobacco-production
 http://www.itcportal.com/
 http://www.godfreyphillips.com/
 http://www.slideshare.net/likeme5/cigarettes-brands-in-india
 http://www.gtllimited.com/
 http://www.slideshare.net/huntinggamer/indian-tobacco-presentation
 Google search
 Wikipedia.com