Indian Tobacco Company Limited
In 2017, the Indian Tobacco Company Limited (ITC) was the cigarette market leader in India (the 8th largest cigarette market in the world bar China).
British American Tobacco (BAT), through its subsidiaries Tobacco Manufacturers (India) Limited, Rothmans International Enterprises Ltd, and Myddleton Investment Company Ltd, was ITC’s major shareholder holding 30% shares.
According to several media reports BAT tried to increase its stake in ITC on several occasions but ITC “thwarted all attempts”, with the Indian ban on all Foreign Direct Investment in the cigarette industry (which took effect on 8 April 2010) alledgely a direct result of ITC’s lobbying of the Indian health and finance ministries.
- 1 Background
- 2 Membership and Affiliations
- 3 Controversial Marketing Strategies
- 4 Tactics to Subvert Tobacco Control Campaigns and Policies
- 4.1 Intimidating Government with Litigation or Threat of Litigation
- 4.2 Tactical Temporary Closure of ITC Cigarette Factories
- 4.3 Mobilising Support through Allies
- 4.4 Corporate Social Responsibility Initiatives
- 5 TobaccoTactics Resources
- 6 Relevant Link
- 7 References
Headquartered in Kolkata, ITC was established in 1910 as the Imperial Tobacco Company of India Limited. The company name was changed to India Tobacco Company Limited (1970), I.T.C. Limited (1974), and finally to ITC Limited in 2001. The name changes reflect ITC’s attempts at “shedding the cigarette tag” by diversifying into non-tobacco goods and services.
In addition to tobacco, the company manufacturers food products and stationary, and is active in the hospitality industry, packaging industry, and the agricultural and information technology sectors. In March 2017, the media reported that ITC was given shareholder approval to explore health care services, with the aim of establishing multi-speciality hospitals in India. In July 2017 ITC announced that it had amended the company’s Articles of Association to incorporate “healthcare” under its purview and was searching for a CEO to take the initiative forward.
Cigarettes remain ITC’s biggest earner, representing 62% of the company's gross revenue in 2016 (42% of its net revenue). ITC’s popular brands of cigarettes and cigars include Insignia, India Kings, Lucky Strike, Classic, Gold Flake, Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut, Duke & Royal.
Editor's note: the sections below focus on the company's tobacco business.
Membership and Affiliations
ITC is a leading member of The Tobacco Institute of India (TII), “a representative body of farmers, manufacturers, exporters and ancillaries of the cigarettes’ segment of the tobacco industry in India”. As of 2017, TII reported to be a member of the following organisations: International Tobacco Growers Association (ITGA) | International Tobacco Documentation Centre, UK | Tobacco Merchants’ Association (TMA), USA | Confederation of Indian Industry (CII)] | Federation of Indian Chambers of Commerce and Industry (FICCI) | Associated Chambers of Commerce and Industry of India (ASSOCHAM) | PHD Chamber of Commerce and Industry (PHDCCI) | Indian Chamber of Commerce & Industry (ICCI) | Federation of Andhra Pradesh Chamber of Commerce & Industry (FAPCCI) | Chambers of Commerce: Andhra, Karnataka and Maharashtra
Controversial Marketing Strategies
- illegal display of advertising billboards and posters
- glamourising cigarette smoking to target youth and low socio-economic groups (for example by associating cigarette brands with success, wealth, achievement and western lifestyles)
- using brand variant extensions (for example a ‘light’ version)
- point of sale marketing targeting minors (for example by placing cigarettes and cigarette advertising in close proximity to candies and snacks)
- camouflaging tobacco marketing by coupling it with other ITC products
- misleading retailers to display tobacco advertisements near their shops
- paying retailers to promote and market tobacco products
- indirectly targeting women (for example including women in the advertisements and using images that create an aura of elegance, sexual allure, culture and style)
Tactics to Subvert Tobacco Control Campaigns and Policies
Intimidating Government with Litigation or Threat of Litigation
ITC has legally challenged tobacco control laws on two occasions:
- 2016 – As a member of TII, challenged expansion of Pictorial Health Warnings (PHWs) to 85% in a court case filed collectively with a retailer, farmer and a smoker
- 2003 – Challenged implementation of the Cigarettes and Other Tobacco Products Act and appealed against prohibition of smoking in public places.
More information about other tobacco industry challenges against tobacco control measures internationally, go to Legal Claims.
Tactical Temporary Closure of ITC Cigarette Factories
ITC shut down its cigarette factories twice as a response to government initiatives to implement PHWs on tobacco packs as detailed below:
- December 2010 – The Indian government announced that it would introduce new graphic PHWs from 1 December 2010, including one about mouth cancer. ITC and Godfrey Philips India Limited, the two leading cigarette manufactures at the time, halted cigarette production for a month from the supposed date of implementation, stating they did not receive clear instructions on the graphic warnings to be included. This led to a delay in implementing the new PHWs and slowed down the rotation of PHW to every two years, rather than annually.
- April 2016 – ITC, and the other two cigarette companies that are members of TII, closed their factories as a response to the government’s decision to expand pictorial health warnings from 20% to 85% of surface of the cigarette packs.
Mobilising Support through Allies
ITC tried to influence tobacco control actions and policies by mobilising support from the following groups:
Tobacco Institute of India (TII)
The media reported several occasions in which TII lobbied against tobacco control measures. For example, the organisation:
- sent repeated representations to the Union Ministry of Health and Family Welfare asking it to withdraw the large mandatory pictorial health warnings
- organised large media campaigns generating doubt about effectiveness of PHWs and organised farmers’ protests against the expansion of PHWs on cigarette packs from 20% to 85%.
- demanded the Indian government include them in the national delegation to the 7th Conference of Parties (CoP 7) of WHO Framework Convention on Tobacco Control (FCTC) held in New Delhi in November 2016, stating tobacco control policies should not be biased towards views of “tobacco control activists and NGOs”
- publicly criticised FCTC for refusing CoP 'Observer' status to the Federation of All India Farmers Association
- objected against the increase of cigarette tax under the Goods and Services Tax scheme, claiming it would be detrimental to tobacco farmers
Federation of Indian Chambers of Commerce and Industry (FICCI)
FICCI sent representations against the expansion of pictorial health warnings to the Ministry of Health and Ministry of Commerce.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM)
ASSOCHAM requested a revision of the inclusion of an advertising ban with the tobacco control act in order to “save livelihood of scores of tobacco farmers and farm workers, bide workers, tribals and retailers”.
Corporate Social Responsibility Initiatives
ITC’s 2017 annual report highlighted rural development and sustainable agriculture practices as examples of the company’s social investments.
CSR practices like those of ITC have been criticised as “one more tool for unscrupulous companies to circumvent the public health laws”. In lieu of tobacco advertising, which has been banned, its argued that the CSR activities give ITC the opportunity for “proxy advertising” to improve its corporate image.
- British American Tobacco
- International Tobacco Growers Association
- CSR Strategy
- Global Tobacco and Nicotine Forum
- Legal Claims
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