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Itc-Why Small Cigarettes Have Been Launched

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1. ITC to counter illegal cigarette market with a pack of new brands: Kurush Grant, Executive Director
Writankar Mukherjee, ET Bureau Aug 28, 2012, 06.18AM IST

(ITC Executive Director…)
It is not common for an ITC top executive to talk about the FMCG-to-hospitality major's largest revenue generator, the cigarette business. However, ITC Executive Director Kurush Grant-who oversees its FMCG businesses including cigarettes and is one of the three directors who are considered frontrunners to succeed YC Deveshwar as ITC chairman-says that the company is determined to fight the illegal industry. ITC is test-marketing a portfolio of new cigarette brands such as Flake Deluxe, Scissors Deluxe, Bristol Deluxe, Gold Flake Superstar and Capstan Deluxe simultaneously. Kurush, 54, tells ET that these brands are pitched against illegal cigarettes that account for 20% of the market. Excerpts of an interview:
What is the impact of the slowing economy on your FMCG business?
FMCG businesses do not easily get impacted by economic issues. Consumers usually postpone large buying decision such as cars and televisions. The only possible impact in the FMCG industry is an increase in downtrading. But as of now, there are no such signs. In the rural market too, the business is not impacted. Bad monsoon can impact farmers, but farm labourers remain unaffected...a lot of factors today impact rural economy such as roll out of programmes like the national rural employment guarantee scheme.
Why have you launched so many new cigarettes brands at the same time?
It is basically to take on illegal cigarettes. The illegal cigarette industry started off in India in 2002. Independent research in India has shown that while there is a fall in volume of duty paid cigarettes by more than 4% between 2005 and 2010, the duty-not-paid volumes grew by 49% during the same period. Attractive tax arbitrage...

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