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Home  » Business » How to beat the tobacco ad ban

How to beat the tobacco ad ban

By Soumik Sen
July 19, 2003 11:43 IST
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It's a Rs 1.5 crore (Rs 15 million) advertising extravaganza intended to go up in smoke.

For the photo-shoot the lake at Amer Fort, Rajasthan was filled to the brim at great expense and supermodel Meghna Reddy was flown in from New York. The props included pigeons, a classy canine and an antique cannon.

What's it all about? Call it Jaisalmer Redux. Godfrey Philips India is pulling an old cigarette brand out from its cupboard and lighting up for the second time. This it wants to make sure that nothing goes wrong with the launch.

Jaisalmer is the most extravagant launch of the season but it isn't the only one. India's leading cigarette companies -- ITC, which claims to have 70 per cent of the market, its much smaller rival Godfrey Philips and VST -- are launching one brand after another in a last-ditch bid to catch the attention of smokers around India.

Godfrey Philips, for instance, is also launching a 59mm micro-cigarette Tipper, aimed at a very different smoker from the one who will be puffing on Jaisalmer. This cut-price brand priced at Rs 5 for a 10-pack will be launched in the southern region, Orissa and Madhya Pradesh.

To makes sure it lights up the mid-segment, Godfrey Philips is also launching Prince at Rs 12.50 for a pack of 10 which will challenge established smokes like Charms.

ITC is also whipping out a slew of new packs. It is reaching out to the well-heeled smoker with Wills Insignia which costs Rs 100 for a pack of 20. ITC hopes that Insignia will take on both Godfrey Philips and a clutch of foreign brands that are being freely smuggled into the country.

Also at the upper end of the market, there's Wills Silk Cut. Internationally, Silk Cut is a premium cigarette owned by the Gallagher Group and marketed by BAT. Here, in price terms, it will be closer to the mid-range at Rs 46 for a 20-pack.

ITC intends to follow this up with a chain of launches in the coming months, including Gold Flake Kings, Cool Mist and Scissors Standard. For those who want to keep a check on spending, there will be Capstan Standard in packs of five.

"ITC follows a strategy of offering its consumers appropriately segmented and clearly differentiated products based on current and emerging consumer needs," says Kurush Grant, chief executive, ITC, tobacco division.

Then, there's Hyderabad-based VST which is lighting up its portfolio with a string of brand extensions. It recently launched Charminar Special Extra Smooth in the Rs 15 price bracket. It has also introduced thicker variants of two micro brands, Charms Ace and Vijay Magna.

Why are both the cigarette companies suddenly swinging into action? For once it isn't only a desire to match each other, puff for puff. They are all racing to beat a blanket ban on tobacco advertising that will come into force in a few months.

Once the anti-smoking act comes into force, the only advertising allowed will be point of sale material at retail outlets. The bill has already been passed by both houses and is currently with the president.

The draconian bill also prohibits the sale of cigarettes within 200 yards of any educational institution and it also bans smoking in public. But it should take a few more months to come into force and the tobacco companies are making use of the time they are getting.

Says a tobacco company executive: "The law won't come into effect for at least another six months. All of us are making allocations so that we can use this window, for the last time, to the maximum."

But Godfrey Philips is also hoping that it can score at ITC's expense. Jaisalmer is being launched in Delhi where ITC's Classic sells around 15 million sticks. That's almost 45 per cent of Classic's annual sales of 45 million sticks.

Godfrey Philips says it will be exploiting its strengths in the north and western regions. Jaisalmer will cost Rs 65 which is about Rs 6 costlier than Classic.

Says Amrish Anand, director, marketing, Godfrey Philips: "We are very strong in the north and western regions."

Godfrey Philips has ambitious plans for Jaisalmer on its second time round the block.

The company hopes that the brand will capture around 20 per cent to 30 per cent of the segment and that it will be fully established in the market in about two years time. If this happens Jaisalmer will pose as a serious challenge to the market leader.

To do so, Godfrey Philips has left no stone unturned. It flew in master British blender Richard Yeoh to craft the product.

Says marketing director, Nita Kapoor, "We wanted to create an aspirational campaign for the quality conscious achiever while maintaining a delicate balance with the rich Indian heritage that Jaisalmer inherently embodies."

These are ambitious plans and it should be said that Jaisalmer has already flopped once in the market. Back in 1989, Godfrey Philips launched two upmarket brands -- Jaisalmer and Rothmans (which it sold on licence from Rothmans International).

But Jaisalmer never sold more than a modest 10 million sticks and the company decided to quietly abandon it after a few months. "In retrospect, we believe we should have stuck with Jaisalmer and developed it," says Anand.

This time Anand says that the new Jaisalmer is different in every way. It has a good-looking gold and blue packet.

Godfrey Philips has also been smoking up a storm in recent years. In an industry that barely grew by about 3.5 per cent last year, the company grew by 11 per cent. The growth has largely come from the best-selling Four Square brand, which grew by 28 per cent last year.

Today, the company's fastest selling puff sells 140 million sticks a month. That's what is giving the company confidence to take on the mighty Classic: "It's high time someone made a dent in their bastion," says Anand. Godfrey Philips is confident that its retail driven push will do magic for Jaisalmer.

And this is just Godfrey Philips' first move. Till now, it has avoided the southern region, which is ITC's bastion. But now Godfrey Philips is planning a frontal assault.

Jaisalmer's launch has been followed by the launch of Tipper, which Godfrey Philips hopes will eat into ITC's market.

How will the tobacco industry be affected by the impending ban on advertising? It's too early to say at the moment, and they've done quite well this year.

ITC, for instance, says it will counter by making a deeper thrust into India's rural areas. Also, it is hoping to take brands like Insignia outside the country.

Godfrey Philips, meanwhile, is planning to take on ITC even in its strongholds. And VST has a stronger balance sheet after abandoning all its non-tobacco diversifications.

Can these companies keep it up after the advertising ban comes into force? That's tough to predict, but for the time being the tobacco companies are, like condemned men, puffing away furiously at their last smokes.

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