Research On Global Markets
Syndicated Market Research Report
Tobacco is so deep rooted in the Indian culture that it’s almost a tradition now. Chew tobacco as a form of recreation is pretty common in India with nearly 48% of tobacco consumption taking place in chewable formats like khaini, zarda, gutka etc. Cigarettes are extremely popular in the urban areas, while their rural counterparts drive the bidi industry. However, after the healthcare industry took cognizance of the harmful effects that tobacco consumption creates, the tobacco industry went through some strenuous times. In early 1990s when the governments of various countries made tobacco expensive, analysts thought it will bring down the consumption. However, that didn’t happen. Ever since then, with each passing year the government continued to levy huge taxes on tobacco products’ sales, but sales numbers continued to grow. While this was becoming the trend, the tobacco industry simultaneously started to look at other alternatives and come up with innovative products. As a result, flavored cigarettes came into being. Sheesha (Hookah), became a popular product to be consumed at cafes and pubs.
As a result, the Tobacco market in India recorded an export of manufactured and unmanufactured tobacco of nearly INR 60.13 Billion in the year 2016. Nonetheless, the tobacco industry has been pretty unpredictable due to various health claims going against it and the unsatisfactory regulatory pressure that is squeezing the operators dry. For instance, the largest manufacturer of Tobacco in India, ITC, has divested its tobacco business to such an extent that now 60% of the company’s revenue is from other businesses like personal care, stationary, hospitality etc. and only about 40% of the revenue is from tobacco which is likely to further decline as ITC has entered the space of foods and is likely to even get into healthcare. While this may be a trend observed in the organized players of the Tobacco market in India, there is a huge unorganized sector which not only produces tobacco as a crop but is also engaged in manufacturing bidis and other formats in which tobacco can be consumed. That space is likely to continue to grow, however the revenue outcomes may not be as great as the cigarettes market.
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