Tobacco ban forces ITC to stub Wills

Cigarette brand to be sold as Navy Cut.

One of the largest selling cigarette brands in India is set to lose its name. ITC has decided to dissociate the Wills brand name from its cigarette business so that the apparel retail venture, Wills Lifestyle, can be promoted without facing charges of surrogate advertising. Parliament recently enacted a law banning all forms of tobacco advertising.

"In our new packaging, the Wills brand name will become inconspicuous and the product will be sold and promoted as Navy Cut," said Kurush Grant, chief executive (tobacco division), ITC.

The Wills brand is estimated to be worth Rs 1,500 crore and is second only to Gold Flake, also owned by ITC, which is valued at nearly Rs 2,500 crore.

India's cigarette market is worth Rs 13,000 crore. The phasing out of Wills means the brand will soon part company with its famous ad line "Made For Each Other".

Elaborating on the decision to phase out Wills, Grant said the ban on tobacco advertising, effective from May 1, had given foreign players an unfair advantage over Indian tobacco companies.

"We are trying to follow the ban in letter and spirit but it is not a level playing field yet. Foreign players have an advantage as they are free to sponsor highly televised sports events like the Formula One races. As a domestic player, ITC can in no way counter such advertising," he said.

With cigarette companies under attack the world over, ITC has, over the last few years, started spreading its business risks by getting into new businesses like readymade apparel, bakery products and matches.

Wills Lifestyle runs a chain of retail stores in the country.

According to Grant, ITC will not cut down on its advertising and promotional spend after the ban on cigarette advertising. "Mass media is a cheaper medium to advertise, but now we will have to rely fully on point-of-sale promotion," he said.

Cigarettes are sold through nearly 3 million outlets in the country and under the new regulations, each outlet can have only two promotional banners. "Reaching out directly to such a huge number of vendors may actually increase our promotional spend," Grant added.

Up in smoke

• The Wills brand name will become inconspicuous and the product will be sold and promoted as Navy Cut.
• Apparel retail venture Wills Lifestyle can now be promoted without facing charges of surrogate advertising.
• The ban on tobacco ads is hurting Indian firms since foreign players are free to sponsor televised events like the Formula One races.