A PROJECT REPORT ON INDIAS TOP BRAND IN CIGARETTES GOLD FLAKE INDIAS TOP BRAND IN CIGARETTES GOLD FLAKE

GOLD FLAKE EXECUTIVE SUMMARY Cigarette is a product which is harmful for health, in spite of this feeble; its sales are increasing globally. The product has been ban from advertisement and promotional activities. It is a challenge for the companies to sale this product and build its brand image. The Cigarette Industry is one of the oldest industries in India. India is the second largest producer of tobacco in the world after China. It produced 572 million kilograms of tobacco in 2002-2003. Approximately 5.5 trillion cigarettes are produced globally each year by the tobacco industry, smoked by over 1.1 billion people, which is more than 1/6 of the world's total population. ITC is the market leader in cigarettes in India. It's highly popular portfolio of brands includes

Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissor, etc. Gold Flake is the top brand of cigarettes in India. It was launched by ITC in the seventies. It is a wellpositioned brand in India and is the market leader in its segment. The brand Gold Flake became popular because of the exceptional characteristics offered by the product and also the branding strategies applied by the company to establish the brand name. Gold Flake was at No.1 position in highest sales in 2003-2004 in FMCG products. About 85% of the revenues of ITC are earned through the sales of cigarettes. The company today is facing competition from International players. Today the cigarette industry of India is booming in the market. The sales of cigarettes are increasing day-by-day. In future the company may face many challenges from competitors and government, but it is very difficult to change the aspirations of the consumers. Due to this the company is benefited. It has been predicted by the company the sale of Gold Flake will grow at the rate of 8% annually.

INDEX Sr.No TOPIC Page No. 1. Chapter I Introduction. About the Cigarette Industry of India. About the Company (ITC). 1-11 2. Chapter II Gold Flake. Hierarchy of the company. Manufacturing process. 12-24 3 Chapter III attribute of the product. Benefits of the product. Packaging of the product. 25-30 4 Chapter IV Marketing Mix. 31-36 5 Chapter V Branding of Gold Flake. 37-45 6 Chapter VI Data analysis. 46-65 7 Chapter VII SWOT Analysis. 66-71 8 Chapter VIII

 Conclusion. 72-73

Chapter 1 Introduction "I like to think of fire held in a man's hand. Fire, a dangerous force, tamed at his fingertips. I often wonder about the hours when a man sits alone, watching the smoke of a cigarette, and thinking. I wonder what great things have come from such hours. When a man thinks, there is a spot of fire alive in his mind--and it is proper that he should have the burning point of a cigarette as his one expression." A cigarette is a product consumed via smoking and manufactured out of cured and finely cut tobacco leaves, which are combined with other additives, then rolled or stuffed into a paper-wrapped cylinder generally less than 120 mm in length and 10 mm in diameter. The cigarette is ignited at one end and allowed to smolder for the purpose of inhalation of its smoke from the other which is usually filtered at the end and is usually inserted in the mouth. They are sometimes smoked with a cigarette holder. The term cigarette as commonly used, refers to a tobacco cigarette but can apply to similar devices containing other herbs, such as

cannabis. They are colloquially known as 'cigs', 'smokes', 'ciggies', 'straights', 'cancer sticks', 'death sticks', 'coffin nails' and 'fags'. Cigarettes are proven to be highly addictive, as well as a cause of multiple types of cancer, heart disease, respiratory disease, circulatory disease and birth defects. A cigarette is distinguished from a cigar by its smaller size, use of processed leaf, and white paper wrapping. Cigars are typically composed entirely of whole leaf tobacco. Commercially manufactured cigarettes are relatively simple objects consisting mainly of a tobacco blend, paper, PVA glue to bond the outer layer of paper together, and often also a cellulose acetate based filter. In the beginning of the 16th century, beggars in Seville, Spain developed the first paperrolled cigarettes when they collected discarded cigar butts, shredded them, and rolled them in scraps of paper. Although the Spanish elite first dismissed them as recycled garbage, these cigarillos, or little cigars, eventually gained popularity during the 18th century. Cigarette smoking spread to Italy and Portugal, and eventually to the rest of Europe and into Asia. Cigarettes were largely unknown in the English-speaking world before the Crimean War,

when British soldiers began emulating their Ottoman Turkish comrades, who resorted to rolling their tobacco with newsprint. The cigarette was named sometime in the 18th century. 9 GOLD FLAKE During World War I and World War II, cigarettes were rationed to soldiers. During the second half of the 20th century, the adverse health effects of cigarettes started to become widely known and text-only health warnings became commonplace on cigarette packets. The United States has not yet implemented graphics-based cigarette warning labels, which is considered a more effective method to communicate to the public the dangers of cigarette smoking. Canada and Australia, however, have both textual warnings and graphic visual images displaying, among other things, the damaging effects tobacco use has on the human body. The cigarette has evolved much since its conception; for example, the thin bands that travel transverse to the "axis of smoking" (thus forming circles along the length of the cigarette) are alternate sections of thin and thick paper to facilitate effective burning when

being drawn, and retard burning when at rest. Synthetic particulate filters remove some of the tar before it reaches the smoker. Companies like Marlboro a brand of Cigarette made by Altria which started manufacturing cigarettes in 1924 gave advertisements that Marlboro is a womens cigarette based on the slogan Mild as May. It became the most popular brand of United States in 2001. Marlboro became so popular that its sales never came down in the States and earned huge revenues. It started giving sponsorship to motor sports and racing cars. It was the main sponsor for Ferrari Formula One car and Yamaha in Super Bike Racing. It became famous globally till 2003 through Ferrari when it won the world championship of Formula One Racing. In mid-2006, special "racing editions" of Marlboro Red were sold in the UK, with a Ferrari-inspired design, although the Ferrari name and badge were not used. Mostly people smoke cigarettes for pleasure or because of frustration or problem. Once they start they get addicted to it. It is very difficult to overcome the habit of smoking till one becomes used to it. In foreign countries most of the people started smoking cigarettes because of celebrities smoking in films and serials. This gave a boost to the cigarette manufacturing

companies by increase in their sales and also promotion of the product as the demand increased. Most countries in the world have a legal smoking age of 18. Seven exceptions are Austria, Belgium, Denmark, Germany, Portugal, the United Kingdom, and The Netherlands, where the age is 16. 10 GOLD FLAKE Since January 1, 2007 all cigarette machines in public places in Germany must attempt to verify the customers age by requiring the insertion of a debit card. Turkey, which has one of the highest percentages of smokers in its population, has a legal age of 18. Another curiosity is Japan, one of the highest tobacco consuming nations, which requires purchasers to be 20 years of age. However, due to the prevalence of cigarette vending machines in the most public of places the effectiveness of an underage ban is in doubt. In other countries, such as Egypt or India (especially Kerala) it is legal to use and purchase tobacco products regardless of age. Approximately 5.5 trillion cigarettes are produced globally each year by the tobacco industry, smoked by over 1.1 billion people, which is more than 1/6 of the world's total population.

Many governments impose restrictions on smoking tobacco, especially in public areas. The primary justification has been the negative health effects of secondhand smoke. Laws vary by country and locality. In India the ban on tobacco and cigarettes has been implied since 2002, but still the companies continue to manufacture cigarettes as the smoking habits of the consumers do not change. Through sponsorship these companies try to publish their brand name and promotion of their product. Cigarette advertisement is also done through movies where the celebrities smoke cigarettes in the film. This also helps in brand and sales promotion. The Indian government is trying hard to impose strict actions against these advertisements and promotion. Even though by imposing strict tax rate these companies are able to continue their business as 1.1 billion people of the world consume cigarettes. In many parts of the world tobacco advertising and even sponsorship of sporting events has been outlawed. The ban on tobacco advertising and sponsorship in the EU in 2005 has prompted Formula One Management to look for races in areas that allow the tobacco sponsored teams

to display their livery. As of 2007, only Ferrari retains tobacco sponsorship, continuing their relationship with Marlboro until 2011. In spite of the ill effects and health hazards people continue to smoke cigarettes for pleasure or because of habit. This habitual of the people helps the companies to overcome the ban and advertisement on cigarettes and tobacco. 11 GOLD FLAKE About the cigarettes Industry of India The Cigarette Industry is one of the oldest industries in India. It is an important agrobased industry. It is highly labour intensive and provides livelihood to about five million people directly and indirectly. Cigarette is an item falling under the First Schedule to the Industries (Development & Regulation) Act, 1951 and requires an industrial license. The cigarette industry has always been on the receiving end when it comes to imposition of taxes and duties in the financial budget of the country. The industry has been reeling under ever-increasing excise duties and innovative form of taxes like luxury tax. Also, due to the high taxes in the country, the competitiveness of the Indian cigarette manufacture is adversely

affected in the global market. Its growth is being further stifled by the imposition of ban on smoking at public places and ban on advertisements. In addition to this, increasing awareness about harmful effect of smoking and lawsuits in western countries has made the entire scenario pretty gloomy for the industry. This leads to increased government regulation and public litigation and a reduced ability to promote the product. In such a scenario, cigarette companies in India are going in for unrelated diversification. Also, with the increasing threat to the tobacco industry as a whole and decreased consumption levels of cigarettes, need gaps in the market are being met by new products like non-tobacco beedi, paan- (betel leaf) flavored tobacco-free gum lets , and substitutes and tobacco patches like Click which are targeted at the traditional cigarette consumer base. At present, there are 19 units in the organized sector engaged in the manufacture of cigarettes with a total installed capacity of about 147.377 billion pieces per annum. The production of cigarettes during 2001-02 was 60577 million sticks. During the current year i.e. 2002-03 (April 2002 to December, 2002) the production has been 43198.20 million sticks. In terms of volume, bids dominate the Indian market for tobacco products.

India is the second largest producer of tobacco in the world after China. It produced 572 million kilograms of tobacco in 2002-2003. India only holds a meager 0.7% share of the US$30 billion global Import-Export trade in Tobacco, with cigarettes/cigarette tobaccos accounting for 85% of the Country's total tobacco exports. 12 GOLD FLAKE The tobacco industry holds tremendous potential for India. For the government, it means excise duties and export revenues, and for the Country in general, it translates into huge employment opportunities. Despite being the second largest producer, India is only the ninth largest exporter of tobacco and tobacco products in the world. Out of the total tobacco produced in India, only one-third is flue-cured tobacco suitable for cigarette manufacturing. Most of the tobacco produce is suitable for the manufacture of chewing tobacco, bidis and other cheap tobacco products, which have no demand outside the country. There is only an export demand for flue-cured tobacco, which is used for cigarette manufacturing. If India adopted a rational tax policy for the tobacco industry that encouraged the growing

of export tobacco, tobacco farmer income would increase and export revenue would grow. If India adopted China's tax policy on tobacco, tax revenue could rise from the current Rs 6,031 crores to Rs 54,000 crores. China's economy-oriented tax policies have given cigarettes 100% share of domestic tobacco consumption. This strong domestic base has proved to be conducive to exports as well as revenue generation. The Indian tobacco industry makes a very substantial contribution to employment. 35 million people are directly or indirectly engaged in the production and selling of tobacco & tobacco products as shown in the table below. In terms of volume, bidis dominate the Indian market for tobacco products. This traditional Indian smoke has shown steady growth during the review period, although manufacturers report that sales are not as high as in the 1980s. Cigarettes dominate the manufactured tobacco products market. This invaluable study analyses the market for cigarettes in India over the time period 1998-2002 and provides forecasts to the year 2007. This title investigates key trends and developments and can be used to evaluate competitive threats; identify strategic partners and acquisition targets; analyse market and brand share

trends and forecast growth opportunities. About the Company 13 GOLD FLAKE ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India Limited'. The Company's ownership progressively Indianised and the name of the Company was changed to I.T.C. Limited in 1974. In recognition of the Company's multibusiness portfolio encompassing a wide range of businesses of Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, AgriExports, Foods, Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'. ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 15 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among

India's Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable Company Brands', in a study conducted by Brand Finance and was also published by the Economic Times. ITC employs over 21,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalising environment to consistently reward more than 4,65,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. ITC pioneered the cultivation and development of Leaf Tobaccos in India. ITC has helped the Indian farmer grow quality leaf tobaccos and linked him to global markets. ITC is the largest buyer, processor and exporter of leaf tobaccos in India - creating a global benchmark as the single largest integrated source of quality tobaccos. ITC serves in 48 countries across more than 69 destinations. ITC buys nearly 50 per cent of all tobacco types grown in India. ITC's Green Leaf Processing plants at Chirala and Anaparti in Andhra Pradesh, the tobacco hub of India, are benchmarked with the best in the world. ITC process and deliver 120 million kilo grams of high quality tobaccos annually. ITC's collaboration with related Government

agencies has helped develop new varieties of tobaccos and explore new areas for tobacco cultivation. ITC is the market leader in cigarettes in India. It's highly popular portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake. The Company has been able to build on its leadership position 14 GOLD FLAKE because of its single minded focus on value creation for the consumer through significant investments in product design, innovation, manufacturing technology, quality, marketing and distribution. In the extremely competitive US market, ITC offers high-quality, value-priced cigarettes. ITC's cigarettes are produced in its state-of-the-art factories at Bangalore, Munger, Saharanpur and Kolkata. These factories are known for their high levels of quality, contemporary technology and work environment. ITC is the leading player in domestic cigarette market. The company commands over 60% market share both in value and volume terms. The company has some of the leading brands of cigarettes like Wills, Gold Flake etc in its portfolio. The cigarette business forms

the bread & butter business of the company. It gets more than 85% of revenues. The company has slowly and steadily nurtured its brands over the years to secure this position. With margins as high as 40% in cigarette business the company has generated huge amount of cash from its operations and is thus facing the problem of plenty. The problem is not just restricted to ITC it is through for other tobacco companies also. Though ITC's management has good track record in managing its cigarette business, its report card on diversification and success of these unrelated business has not been good. Achievements 15 GOLD FLAKE Achieved five star Health and Safety Rating from the British Safety Council for its cigarette factories at Bangalore, Munger, Kolkata and Saharanpur and the "Sword of Honor" for Bangalore & Saharanpur for 2006-07. Bangalore, Kolkata and Saharanpur cigarette factories won the prestigious Greentech Safety Gold Award for the year 2007 in the manufacturing sector. These awards are in recognition of the high level of performance that the units have achieved in Environment Health and Safety (EHS). Saharanpur along with Kolkata and Munger factories were honored with the same award in 2006. Bangalore Factory has also received the Platinum Award for outstanding achievement in safety management in 2006.

 Bangalore Factory has won the "Safety Innovation Award 2006" for Innovative Safety Management System from the Safety & Quality Forum (Institution of Engineers) and also Unnatha Suraksha Puraskara Award from NSC Karnataka Chapter. The cigarette factory at Kolkata was awarded the "1st National Security Today Award 2005" in the category of Best Maintained Fire Safety System. Bangalore, Munger & Kolkata have won the prestigious Greentech Environment Excellence Gold Award for the year 2006. Munger factory won the Excellence in Water Management Award from CII-GBC for 2006.