Market Overview of Smokeless Tobacco (“SLT”)
By Vishnu Sultania, Avinash Singh
- Background: This paper describes the high-level operational environment as well as business opportunities in SLT Market.
- Regulation: SLT could be with or without tobacco, nicotine or other psychotropic substances. It is highly regulated and prohibited in many states in India and other countries. To avoid prohibition, industry is extremely innovative in packaging, distributing, disclosure and advertisement.
- Macro Market: India (UP, Bihar, Maharashtra and almost whole of India) and internationally Pakistan, other Asian countries, and North America (through immigrants).
- Market Size: According to Straits Research, The Indian SLT market is expected to reach US$10.365 billion by 2026 at the CAGR of 10.4% (2019–2026). Global market size is US$ 14.61 billion in 2024 and growing at CAGR of 2.36% (2024 -2029).
- Consumer Profile: Mostly poor, ultra poor and less educated. Recent trend in elite is to move toward SLT considering this is less hazardous than smoking tobacco (Cigarettes) by way of e-Vapor.
- Major Producer in India: DS Group, Manikchand, Ghodawat Group, VSG (Vimal), Dholakia Tobacco.
- Popular brand/products: Pan Parag, Tulsi, Rajnigandha, Kesar, Manikchand, Vimal etc.
- Major Ingredients: Betelnut, Catechu, Tobacco, Lime, Zarda, and Flavouring agents and sweeteners.
- International Producers: Altria Group, British American Tobacco, Philip Morris International, Imperial Brands.
- Selling Units: The manufacturer sells the small sachets and saleable box in gunny or artificial bags, and each bag priced approximately INR 7800 at retail level.
- Unit Metrics:
Segregation of Margin during Distribution
Primarily three distribution level, agency (distributor), Wholesaler, and Retailer. The margin retained by Agency and Wholesaler is varies from 0.5% to 1%, and Retail margin varies from 20% to 25%.
The margin on branded product within distribution channel is lower because of high turnover and margin in non-branded products could be higher but will be slow moving.
For ease of comprehension, we have not created complex excel but can be provided if needed. Excel is ready and can be expanded in multiple way depending on our appetite for growth and market share. The major challenge in distribution will be penetration in the Tier-II cities and below.
It will have a social bearing.
Author (s)
Vishnu Sultania is the Managing Director at AKMV Consultants, and a financial advisor to United Nations UNDP | vishnu@akmv.co.in | +91 98100 25049 | +91 88519 31474
Avinash Singh is a qualified Chartered Accountant and serving as a Finance Analyst at AKMV Consultants | avinash.singh@akmv.co.in | +91 89291 04081
