Apex court verdict gives gutkha firms something to chew on

The Supreme Court's (SC) decision to lift the ban on tobacco products on Monday is set to boost the turnover of gutkha comanies which suffered a stagnation in sales over last two years.

An AC Nielsen survey estimates the size of the chewing tobacco and gutkha industry at Rs 20,000 crore.

According to industry estimates, sales of premium brands could immediately increase by almost 25 per with the opening up of markets worth more that Rs 1,000 crore.

Ashok Aggarwal, vice-president, DS group, which manufactures Rajnigandha and Baba brands of chewing tobacco and gutka, said: " The apex court verdict will immensely help premium branded companies to prop up sales."

The sales of tabacco products have suffered a set back, especially in Maharashtra and Andhra Pradesh, after the states banned the products two years ago.

After the apex court ruling, the ban now will be lifted from Maharashtra, Andhra Pradesh, Jharkhand, Bihar, and Tamil Nadu.

However, the lift on the ban would not invite gutkha makers to set up manufacturing bases in the states from where they were driven out.

Pointed out an executive of Bombay 1000,"Gutkha makers went out of Maharashtra, for an example, and set up their production facilities elsewhere."

Another deterrent for the makers to come to Maharashtra was that the state government is planning an appeal against the SC order. However, it was estimated that 4,000-5,000 more jobs would be created in terms of distribution of the product.

The local paanwallahs said six months into the ban, brands such as Sanket No 1, Hira, Simla, Goa and Moolchand had repackaged and repositioned the product. Instead of marketing the supari and zarda in a single sache as gutkha, they started selling it in separate packets.

However, two saches did not mean that consumers had to shell out more. While Sanket No 1 gutkha was priced at Rs 1.50, the combined sachets were available for 50 paise less. Goa sachets at Rs 1.50 were, however, costlier than the gutkha by half a rupee. Simla gutkha and sachets sold at the same price of Re 1.

While many of the gutkha regulars opted for the separate saches, as paan vendors point out, those who wanted the original thing found out where they could get it from.

Nonetheless, the ban did manage to dent demand and consumption of gutkha to some extent. For the first six months, when gutkha companies had not yet come out with the separate saches, gutkha, in any form was not available in most areas, legally.

Later, even though gutkha companies launched different avatars of gutkha, prospering paan wallahs saw their new avatar gutkha sales dropping to Rs 100 a day as against Rs 600 a day before the ban.

The ban was harsher on smaller vendors. Their gutkha sales have been cut by almost half. This was largely because the separately packaged product was not quite the same.