THE ROAD AHEAD FOR SONA BIDI

ABSTRACT:

This case study talks about Godfrey Phillips India entry into largely fragmented Rs
15,000 crore bidi market .Godfrey Phillips intends to enter into contract manufacturing
deals for bidis so that it can emerge as the single-biggest national player and it would be
first company to target the whole country and how they are trying to capture the rural
market and reduce the market share of well established brands like 502 Pataka, Shiv Bidi,
Shambhaji, and Desai and Highly Concentrated Foreign Market.

KEY WORDS:
GPI (Godfrey phillps India), 502 pataka, Bidi, Sona 24 Carat, Mangalorean, Bengali.

INTRODUCTION:

“Tobacco is the only consumer product which when used as directed kills its
consumer.”

In Today’s era people would rarely know that bidi industry is still a highly concentrated
market and it is 5000 crore market. . Bidis account for over 50% of total tobacco use.
Cigarettes account for less than 20 %. 2 Million People are engaged in leaf collection. 4.4
Million People are employed for bidi rolling. Bidis traditionally are hand made.
Estimated income USD 2.5 bn to 3.7 bn p.a.Bidi volumes estimated 7-8 times of
cigarettes (per stick basis). There is a Estimated 700+ billion sticks consumed. There are
More than 17,000 registered manufacturers, Over 5000 brands and Over 100 million
smokers.

(Table No. 1)

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As explained in Table No.1 , The Bidi- consumption in rural market accounts to 80 %.
Factors responsible are - lower tax, traditional habits, low income, rural masses, increased
use by women (in certain states).

In India, Bidi industry is highly unregulated. With having fragmented markets. Taxes &
duties are low as compared to Cigarettes. This forces many small scale manufacturers to
start their own brand of Bidi. Government much softer on the Industry due to Vote bank
& Strong lobby. Over 3 million Indians are employed in the manufacture of beedies, a
cottage industry that is typically done by women in their homes.

Workers roll an average of 500-1000 beedies per day, handling 225-450 grams of tobacco
flake and inhaling tobacco dust and other volatile components present in the work
environment. It is estimated that 325,000 children work rolling beedies despite beedi
manufacture being classified by India Child Labor Prohibition and Regulation Act as
hazardous work.

Types of bidis

Mangalorean – Slim bidi with an average length of 60.7mm and a circumference at

burning end of 20 mm.

• Key Brands – Spl Telephone, No 30, Ganesh 501,

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Bengali - Average length of 61.3 mm and a circumference of 21.5 mm at burning end.
This bidis is considered slightly stronger than the Mangalorean type of bidis.

• Key Brands – 502 Pataka, Desai, Shiv, Sambhaji

App. Cost of bidis to the end consumer-

Rs.200/1000 Bidis.
Margin-
Owner 8.5%
Distributor 4%
Wholesaler 5%
Retailer 10%

Godfrey Phillips India

Godfrey Phillips India is the second largest tobacco company in India, with an annual
turnover exceeding INR 2200 crores (approx. US $458.05 million). It owes some of the most

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popular cigarette brands in the country like Four Square, Red and White, Jaisalmer, Stellar,
Cavanders and Tipper. Besides tobacco, the company is also involved in diverse businesses
like Confectionary, Tea, Cosmetics and Retail. The products are distributed over an extensive
India wide network of more than 500 distributors and 800,000 retail outlets. With the
Corporate Office in Delhi, the Company has offices all across India in over 8 locations.
Company wants to enter into lucrative Bidi Market in India.

Cigarette brands-

Highest sales in Rajasthan & Gujarat.

-Haryana state is called as the Red & White state.

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SONA 24 CARAT BIDI

At present the company is test marketing its bidi named “Sona 24 Carat “in Harayana,
Rajasthan and Gujarat and set to launch in October with the sticky lock packaging and
not the conventional type of packaging where paper is been used, but the road for GPI is
not going to be easy because it is very difficult is to change the mindset of people.

4P’S OF SONA 24 CARAT

Product-
1) Bengali Type Bidi and Mangalorean with a blend matching to 502 Pataka.
2) After establishing the brand, Company can launch other variant with blend
Matching to Desai Bidi & Shiv Bidi. Adding Distinct Thread Colour.

Place-
1) Presently in northern and western Region.
2) Company has strong distribution network, so company can use
It is to provide 360 degree distribution.

Price-
1) Company has launched its bidi at a premium price. Rs.7/Bundle (With
Blend similar to 502 Pataka).

Promotion-
1) Direct advertising is not allowed in case of bidi .So Company have
2) Attractive schemes like giving 2 bundle free with every puda. Free gifts.
3) Good margins to dealers & retailers.
4) Free samples distribution and making a brand an iconic image like that

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 Of 502 pataka. 502 pataka has an iconic image of being the strong, .
5) Increasing visibility of the brand.

PROBLEMS FACED DURING THE TEST MARKETING:

GPI’S bidi is just in the inception stage and it will take time for them to taste success
because they have to fight with 50 year old brands and it is going to be a daunting task
for the company to change the mindset of rural people, who have been consuming brands
like 502, Shankar from last 50 years, for majority of the people it have become a daily
necessity and are loyal to one particular brand. The biggest problem also faced is people
are not aware about the company’s name , they are only aware about different products in
the market.so the role of the retailer is important ,he is one who is the biggest influencer
in the rural areas.

SYSTEM ( THE PLAN )

A well organised system exists for the marketing and distribution of beedies to
different parts of the Country. There are around 500 major distributors spread over the
length and breadth of the Country. These distributors are supplied with beedies from
the nearest branch of the Firm on advice from the Head Office on 15 to 20 days credit
and one benefit they are going to have is the number of distributors which is highest
after ITC and it is not into bidi making.

One town –one Brand:

There are more 5000 brands of bidi in the market and one main problem is that each town
have a different top selling bidi and the distance between the towns would be 100 kms.i.e
different brands for Bawal and Dharuhera ( Harayana) towns and it is case in almost all
the towns

Premium pricing strategy:

GPI is following the premium pricing strategy and it is the costliest among all the bidi’s
because they provide a better blend and better quality bidi’s when compared to others,

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but people In rural areas are not happy with the pricing of bidi’s.GPI aim is to establish
themselves as a different brand and not like the 5000 brands where the the competiton is
intense but their pricng is against the motion as per the test marketing.

SONA will have to fight with :

1) 501 Ganesh- Established in 1940, the Mangalore Ganesh Beedi Works manufactures
the 501 Mangalore Ganesh Beedi, the world's most popular brand of beedies.

2) Shivaji Bidi- A major bidi brand in India manufactured by Sable & Waghire Bidi
Works of Pune. Shivaji is sold mainly in Maharashtra & Gujarat. Shivaji also has another
brand called Rajkamal Bidi which is selling in these 2 states. Shivaji bidi exports 18
different variants to many countries like U.S., Middle East, and West Indies etc.

3)502 Pataka Bidi- Pataka Biri Manufacturing Co. Ltd was established in the 1950s,
and now has a production of 100 million bidis per day, through ten factories. It has a
dominant presence in the markets of Haryana & Delhi. Bidi is manufactured in
Murshidabad area in West Bengol. 502 Bidi is also one of the major export players from
India.

4) Special Telephone Bidi- Manufactured by Laxmi trading company under the name
of Jaswant Chap Telephone bidi is India’s one of the top Bidi manufacturers. Based at
Ahmedabad, its major market is Gujarat state with 2 variants Special telephone which is a
Mangalorian type bidi and Delux Telephone which is a Traditional type bidi. Telephone

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bidi also has significant sales in Rajasthan are Flavored bidis are being exported to
many countries of the world.

5) Desai Bidi - The Company was founded 102 years ago in Pune by Shri Haribhai V
Desai. One of the oldest bidi brands still dominates the markets of Rajasthan, Gujarat &
Haryana. Desai Bidi boasts of having own R&D department & State- of- Art
manufacturing facilities in Pune. Many varieties like Chota Desai, Bada Desai,
Desai officer etc prevailed in the market. Now, company has diversified its business into
Food products with the brand mane – Mothers Receipe.

Godfrey Philips have done their planning very well, by test marketing in the states which
constitutes about 60 % of bidi consumption population but they are yet to complete their
homework and the next 2 to 3 yrs is going to be a very critical period in the company’s
portfolio because they have allotted Rs 700 Crore and it is big number in a bidi segment.
Bidi is one of the oldest and a close to heart brand for many rural Indians, so the question
arises whether GPI would succeed in their mission i.e success all over the country or will
be like a bee in a hive.

Conclusion:

The next two years would be a crucial period for GPI because they need to capture or
create brand awareness of Sona Bidi.The results of Test Marketing have Been
moderate.GPI have been very successful in sale of Cigrette ,but it is testing time for
them and will they beat the Small giants of the Rural Market,will they open the bidi
industry with their premium pricing and attractive pricing or remain a bee in the Hive.

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QUESTIONS

1) The road ahead for SONA bidi looks little bleak, what is your stand on SONA
BIDI’S future?

2) The pricing strategy followed is premium pricing strategy –Comment?

3) With their good brand name, will GPI Change the taste and preferences of the
people in the rural market?

Reference

Tobaccofreecenter.org/files/pdfs/en/IW_facts_products_bidis_welfare.pdf
www.whoindia.org/ free tobacco initiative
www.en.wikipedia.org / bidi industry in India
www.godfreyphillips.com
www.who.int/tobacco/framework/public_hearings/F2000196.pdf
www.ias.ac.in/currsci/may252009/1335.pdf
dacnet.nic.in/tobacco/handbook/intro.htm

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