GPI May Extend Cigarette Brand To Other Products To Skirt Ban On Ads

New Delhi, April 28 | Updated: Apr 29 2004, 05:30am hrs
With the advertising ban on cigarettes to come into effect on May 1, Godfrey Phillips India (GPI) says it does not rule out the possibility of extending its cigarette brands into other products.

The other cigarette major, ITC, which extended the Wills cigarette brand into lifestyle clothing in 2001, says there will be no surrogate advertising.

GPI also says it will continue to advertise the Red & White Bravery Awards, which it does not consider to be surrogate in the first place. ITC and GPI together control about 83 per cent of the domestic cigarette market. GPIs senior vice-president Sandeep Kumar told FE, We cannot rule out extension of cigarette brands into other lines, though I dont think we will get into clothes. If we do extend into other lines, however, it will be for commercial growth and not for surrogate advertising intent.

GPI depends largely on tobacco and cigarettes for its sales, and garners a small amount of revenue from its tea brand Tea City. The company has an annual ad budget of about Rs 30 crore, of which a large part has gone into advertising Four Square, Red & White and Jaisalmer brands.

An ITC spokesperson told FE, We may use our existing advertising space to advertise our non-tobacco businesses. The contracts between our branding team and agencies are confidential, but we are sure that there will be absolutely no surrogate advertising of cigarettes. He did not comment on whether ITC would extend the Wills brand beyond clothing.

Over the last few years, ITC extended the Wills brand (primarily concerned with cigarettes) into lifestyle clothing, to produce new brands including Wills Sport, Wills Lifestyle, Wills Clublife and Wills Classic. This was widely seen as ITC associating the Wills brand with different things before the expected tobacco advertising ban came into being. While all Wills cigarette brand advertising is handled by J Walter Thomson, the Lifestyle account is now with Lowe India. GPI made a turnover of Rs 1,175.89 crore in 2004, of which Rs 1,142.32 crore came from cigarettes. Only Rs 33.57 crore came from non-tobacco businesses. ITC had turnover of Rs 11,194.47 crore for the year ended March 31, 2003, of which cigarettes contributed Rs 8,764 crore.

Other companies in the cigarette market include Golden Tobacco Company, a part of the Rs 1,200 crore Sanjay Dalmia Group. The company makes Panama cigarettes, sold primarily in rural India, with little or no advertising. When contacted, the companys vice-president (sales) Monal Desai said that they had no current plans to extend the Panama brand into other products since their mainstay was tobacco.