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Economic impact of cigarettes

Economic impact of cigarettes. Facts and Figures. Substitute for Cigarettes. Nicorette , e-stick, etc. Complementary for Cigarettes. Matchstick, Matchbox Lighter Sweetener (Mint) If the price of the matches and lighters went up, the quantity demanded would decrease.

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Economic impact of cigarettes

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  1. Economic impact of cigarettes Facts and Figures

  2. Substitute for Cigarettes • Nicorette, e-stick, etc.

  3. Complementary for Cigarettes • Matchstick, Matchbox • Lighter • Sweetener (Mint) If the price of the matches and lighters went up, the quantity demanded would decrease. Due to this the demand for cigarettes will also decrease slightly.

  4. Facts • Domestic consumption in 2011-12 has increased by 4.19%. • Total no. of units sold in 2009-10 : 1,11,860 million sticks • Total no. of units sold in 2010-11 : 1,11,487 million sticks • Total no. of units sold in 2011-12 : 1,16,166 million sticks

  5. Facts • Cigarettes account for less than 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation • Cigarettes (15% of tobacco consumption) contribute nearly 85% of Revenue to the government from tobacco sector. • Annual per capita adult cigarette consumption in India is appx. one tenth world average : 85 • Future growth depends on relative rates of growth of per capita income and moderation in taxes

  6. Facts • A survey done by Union Ministry of Health and Welfare shows that 49% of men and 17% of women smoke in India. • 50 to 60% of them are youngsters • “Global Adult Tobacco Survey” tells that on an average a person spends Rs.500 on smoking if his monthly income is Rs.1500 • The proportion of income spent on cigarettes is much higher in the lower income group.

  7. Per Capita consumption in India ~ 10% of World average

  8. Facts • Taxation is the best way to counter cigarettes consumption • Rising cigarette tax to Rs 98 per 1000 sticks would add Rs 36.9 billion to tax revenue and prevent 15.5 million current and future smokers dying prematurely. • increasing cigarettes taxes to Rs 3691 per 1000 sticks would further add Rs 146.3 billion to tax revenue.

  9. ITC Cigarette business • Market leadership • Powerful brands across segments • Leadership in all segments - geographic & price • Extensive FMCG distribution network • Direct servicing of 1,00,000 markets & 2 million retail outlets • World-class state-of-the-art technology and products • Investment - Rs.10 billion in six years • Exciting long term growth potential

  10. Economic Impact • Cigarettes smoking is a habit so hard to kick, demand for cigarettes is highly inelastic • Only large price decrease / increase will shrink / stretch demand because the demand is inelastic to price change. • When tax is imposed or increased, its burden falls on consumer. • Substitute product becomes more attractive relative to the newly taxed product that can be consumed instead. • Income increase can lead to more than proportionate increase in cigarette consumption.

  11. Thank you

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