The Indian 'bidi' is never likely to make way for the Cuban Cohiba in its home market. As many as 100m people smoke the locally-produced sticks of tobacco.
Yet, cigars are now the fastest growing part of the tobacco market in Asia's third largest economy.
India has a tenth of the world's smokers. Most of them puff on the bidi, an unfiltered tightly-rolled leaf, locally known as the poor man's smoke and part of a uniquely Indian industry with considerable political clout. Appeal is in the price, as much as the taste. A pack of 10 sells for little more than Rupees 2.
Nonetheless, in the world's fastest growing economy after China, the bidi is being out-paced by its big brother, the cigar.
India's tobacco market, like neighbouring China, is expanding fast, growing at 9 per cent a year over the past five years. Sales of cigars and cigarillos are rising quicker than other tobacco products, and gaining popularity among the more affluent in India's major centres, according to research by Datamonitor, the business information group.
"Sales in this category are soaring in metropolitan cities such as Delhi and Mumbai, where the impact of economic progress has been more widespread," says Gaurav Marchanda, a consumer markets analyst at Datamonitor.
He says the cigar is viewed as a "lifestyle" product among the young and financially successful.
Cigar shops offering finer Cuban and Dominican brands remain in short supply and beyond the reach of many. They are found in the precincts of a handful of luxury hotels. Cingari at the Oberoi in New Delhi, the capital, and the Cigar Shoppe in nearby Gurgaon are two of the best known.
Indian tobacco companies are beginning to spot the opportunity, and the chance to undercut imported products already subject to high duties.
Last year, ITC, India's largest cigarette maker and seller of brands like Gold Flake and Navy Cut, introduced Armenteros cigars in a partnership with La Aurora, the Dominican tobacco group. The cigars are sold from about Rupees 450, a snip of the price of a good Havana.
Godfrey Phillips India, meanwhile, imports Madrid-headquartered Altadis cigars and distributes the cigarillo Café Crème brand among a network of 25,000 retailers.
The growth in high-value tobacco products is defying newly introduced laws to curb smoking, and high duties. Lighting up in many public places is forbidden, as is cigarette advertising.
So too is the competitive edge of the low-value bidi. It alongside chewing tobacco, used by as many as 125m Indians, is one of the cheapest, most lightly regulated and least taxed tobacco products in the world. Not even Communist-ruled Cuba can beat that.
Tuesday, January 18, 2011
Source: THE FINANCIAL TIMES