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Cigarette manufacturers face heat from foreign brands - Views on News from Equitymaster
 
 
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  • Feb 26, 2000

    Cigarette manufacturers face heat from foreign brands

    According to newspaper reports, the sales of contraband cigarettes have been growing at a rate of 7-8% over the last three months. This is mainly the result of a diversion of excess global production to large markets like India.

    Cigarette companies in India have faced near stagnant volumes over the last three years mainly due to sluggish economic growth. They have however been successful in generating topline growth by raising prices. The fact that illicit imports have been eating into their markets is not likely to go down well with the industry.

    That there is demand for foreign brands like Marlboro in India is well accepted. To tap this demand ITC, India's leading cigarette manufacturer, introduced brands like Benson & Hedges in association with its parent. BAT Plc.

    There is an urgent need to curb the menace of contraband cigarettes to preserve the profitability of the domestic industry. Although the menace may yet be small as compared to the size of the total market, it could grow into a significant source of concern in the future. Success in efforts to curb this would add to the growth of the domestic industry.

     

     

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