India: As Smoking Gets Dearer, ITC Bets on Nicotine Gum

Source from:  The Times of India  10/24/2013

The big daddy of cigarette business, ITC, is now gearing up to woo smokers with an antidote— Kwiknic nicotine chewing gums—to their "injurious to health" habit. In the process, the company is restructuring a dormant category, hitherto the domain of drug companies.

The move by the maker of such popular cigarette brands as Gold Flake, Wills Navy Cut and Scissors is aimed at diversifying beyond traditional business which has become tougher in the face of excise duty hikes, anti-smoking campaigns and health concerns. "ITC's latest move is a sign of the changing nature of the nicotine business," said an industry observer.

Asia's second-biggest listed tobacco company is following the footsteps of its global rivals such as Reynolds (maker of Camel and Pall Mall brands) and Altria (Marlboro), which have expanded into nicotine lozenges and sprays (global combined worth of $1 billion)— products that are less harmful than cigarettes.

Positioned as an over-thecounter (OTC) product, ITC intends to exploit its strong retail distribution channel for the national roll out of Kwiknic. Pharma companies sell nicotine chewing gums largely through the chemists' network—both as an OTC product as well as a prescription drug. ITC's arrival will create competition for Johnson & Johnson's Nicorette (US President Barack Obama's favourite) and Cipla's Nicotex and Nicogum in the Rs 20-crore Indian market-- small, but growing at a whopping 43%.

The nicotine chewing gum is a popular and effective method of long term nicotine replacement therapy globally. The World Health Organization has included it under the essential medicines list.

In September, ITC— partly owned by British American Tobacco—increased prices of some of its cigarette brands by 10% to overcome the excise impact and protect margins. Cigarettes account for 80% of the Kolkata-based company's profit and 60% of its sales.

Kwiknic, which contains 2mg of nicotine, comes in two flavours, mint and paan, and is priced at Rs 50 for a pack of 10 pellets— on a par with brands such as Nicorette. Kwiknic's rollout is happening just two months before New Year's Day when smokers usually "resolve" to kick the butt. Perhaps , along with ITC, smokers too can pin their hopes on Kwiknic. Enditem