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Why ITC is now selling cigarette alternatives as well

Why ITC is now selling cigarette alternatives as well

ITC, India's leading cigarette maker, is offering help to those who want to quit smoking. It has begun selling a nicotine gum called "KwikNic", as an alternative to cigarettes.

ITC, India's leading cigarette maker, is offering help to those who want to quit smoking. It has begun selling a nicotine gum called "KwikNic", as an alternative to cigarettes. It works on the principle of Nicotine Replacement Therapy (NRT) and helps reduce the urge for tobacco. NRT involves the use of products that provide low doses of nicotine but do not contain the toxins found in smoke.

A few pharmaceutical companies are already offering NRT products, mostly chewing gums. Cipla was the first to launch NRT drugs in 2001 with its product Nicotex. Another product Nicogum was launched in 2008. These two dominate the cigarette alternatives market which 81 per cent and 18 per cent market share respectively, says a Cipla spokesman quoting health-care market intelligence data.  Johnson & Johnson and German Remedies also sell NRT products.
   
Can ITC compete with them?

It stands a chance because this is a growing market. According to the Cipla official, the NRT market is around Rs 20 crore up from Rs 14 crore in 2012. "Currently the NRT industry is dominated by pharma players," says an ITC spokesperson. "Moreover such products are mainly available in medical stores.  This is where ITC wants to make a difference. ITC intends to leverage its wide distribution network to paan shops to offer this product to any consumer who wishes to gradually stop his tobacco consumption."

ITC intends to leverage its distribution network to paan shops to offer this product to any consumer wishing to stop tobacco consumption

KwikNic may not yet have reached all the two million retail outlets, including paan shops, where ITC has direct presence, but it will certainly go way beyond its rival products which are confined to the country's 800,000 pharmacy outlets The added incentive for ITC, its spokesperson says, is that "India holds the unique position of having the highest number of people chewing tobacco in the world." The Global Adult Tobacco Survey (GATS) conducted by the government in 2010, says, "More than 63 per cent of tobacco consumption in India is in the chewing tobacco form. Cigarette consumers are less than six per cent of adults."

Analysts claim ITC's NRT products are unlikely to dent its cigarette sales. "These are at best long-term alternatives and ITC's gross sales are too huge for any new product like this to have any significant impact on its mainstream products in the short to medium term," says Amnish Aggarwal, Senior Vice President, Motilal Oswal Securities. In 2012/13, ITC reported gross sales of Rs 25987.20 crore from cigarettes.

It appears a win-win proposition for ITC. It sells cigarettes to smokers. And NRT gums to those trying to quit. If some resume smoking again, ITC's cigarettes are still available.