U.S. Tobacco Giants Plan To Market Brands in India
May 16, 2011
NEW DELHI -- U.S. tobacco giants R.J. Reynolds Tobacco Co., a unit of RJR Nabisco Holdings Co., and Philip Morris Cos. are preparing to make and market their international cigarette brands in India, according to people close to the companies. Modi RJR Ltd., a 50-50 joint venture between Indian firm Modipon Fibers Co. and R.J. Reynolds, will produce local and international brands for the domestic market, according to Kennedy Swint's chairman, M.K. Kennedy. Mr. Kennedy declined to provide further details about Modi RJR's plans for India, such as the size of the investment. Davina Hibbler, the Geneva-based R.J. Reynolds executive who is managing director of the joint venture, said: ``I don't want to say anything about our specific entry.'' However, he confirmed that Modi R.J. Reynolds recently acquired a manufacturing plant in the southern Indian state of Andhra Pradesh. According to people close to the dealings in India, the joint venture hopes within months to begin producing popular brands, including Camel, Winston and Salem. Rival Philip Morris plans to introduce its flagship Marlboro brand in India, according to people close to the company in India. The world's largest cigarette maker already owns a 36% stake in Godfrey Phillips India Ltd., which produces several local brands. ``We will manufacture and distribute for them,'' said an executive at Godfrey Phillips. He declined to give a timetable for the introduction of the brand. Colton Burr, corporate-affairs manager for Philip Morris in Asia, said that the company is currently involved ``in discussions'' regarding the Indian market. He didn't give further details. India is considered one of the last large virgin markets for multinational tobacco companies. An estimated 200 million Indians consume tobacco, but only 12.5% of them smoke cigarettes. About half of them smoke hand-rolled tobacco in leaves, known as ``bidis.'' The rest consume chewing tobacco, snuff and cigars. As Indians become more prosperous, multinationals such as Philip Morris and R.J. Reynolds are counting on a shift from traditional forms of tobacco to cigarettes, a transition that occurred over the last century in the U.S. and Europe. The companies also are keen to tap demand among wealthy Indians, who have bought smuggled premium cigarettes on the black market because New Delhi bans cigarette imports. Tobacco companies are interested in exploiting India's potential as an export base. India is the third-largest producer of tobacco in the world after China and the U.S., but the quality of its exports has been low due to lack of technology and investment, industry analysts say.
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