India: Gutkha Makers Get Creative, Bypass Ban With New Fix

Source from:  Business Standard 10/09/2012

A few weeks after 14 states banned production, sale and marketing of gutkha, its manufacturers have come out with a new way to sell their products by cleverly bypassing the ban. Instead of the earlier "ready-to-consume mixes", companies are now selling gutkha in a new avatar — where chewing tobacco and paan masala are sold in two different sachets. When the two packs are mixed, consumers get a proper substitute for gutkha.

This new sales trick does not violate any law. "This is not new. DS Group has been selling Rajnigandha (paan masala) and Tulsi (chewing tobacco) separately for years. And, people mix the two for consumption," said an industry source.

"With the ban, all other gutkha manufacturers are following the same strategy. It does not affect the companies' business much, except the increase in packaging costs."

If you go to a roadside paan shop and ask for any gutkha brand, the retailer will give you two separate packets, saying "mix the two and you will get your stuff".

According to retailers in Delhi, companies started supplying the new product mixes, or the replacement for gutkhas, three to four days earlier. "We have been selling the products since then. Companies have also recalled the earlier gutkha stocks from retail shops," said two Delhi-based retailers.

According to another industry source, companies are also offering incentives to sales persons to boost sales of the new substitutes for gutkha. The incentives include cars, bikes and other packages.

Konkodi Padmanabha, president, Central Arecanut and Cocoa Marketing and Processing Co-operative (Campco), said this would help the companies to sustain but the government should ensure they did not not mix anything harmful with the paan masala. The margin would be squeezed and it might result in a price increase. "We are not batting for any tobacco product. All we are doing is highlighting which product is actually harmful. Our attempt is to improve awareness," he said.

At Delhi retail stores, Shikhar branded paan masala and chewing tobacco together are being sold at Rs 3, though each of the sachets is priced at Rs 1. "If you need it, buy at this price," said retailers. They are also offering four units each of paan masala and chewing tobacco at Rs 10. Clearly, the products are being sold at a much higher price than the maximum retail price. Last week, the Smokeless Tobacco Association had issued advertisements saying it was unfair to ban their products when the tobacco content in these was lower than that in cigarettes.

The advertisements mentioned that one pouch of gutkha contains 0.2 g of tobacco as against 0.63 g in a single cigarette.

The advertisements also blamed "the powerful lobby of cigarette companies" for the ban, which has compelled a number of small gutkha manufacturers to shut shop. Central Arecanut and Cocoa Marketing and Processing Co-operative Ltd and the All India Kattha Factories Association also joined the Smokeless Tobacco Association in the drive. Arecanut or betelnut and kattha are the ingredients in gutkha.

The states that have banned gutkha and paan masala include Delhi, Maharashtra, Gujarat, Goa, Mizoram, Kerala, Madhya Pradesh, Chhattisgarh, Haryana, Punjab, Bihar, Rajasthan, Jharkhand and Sikkim. Enditem