ITC Ltd has decided to introduce BAT Plc's international brands -- Benson & Hedges and State Express 555 -- in February next year.
However, even after the launch of the international brands, Indian Kings will remain the top-of-the-line brand of the Calcutta-based tobacco major.
The central government had recently cleared a 20-year licensing pact between ITC and BAT for bringing the latter's popular brands into the country.
An investment of Rs 200 crore, to be shared equally by ITC and BAT, has been earmarked for marketing and advertising of the brands in the first two years.
ITC will pay the UK company royalty at the rate of 5 per cent per year.
As part of its attempt to maintain the swadeshi image of the company, India Kings will remain the premium and costliest brand of ITC and cost Rs 57 per pack of 20 cigarettes, while State Express 555 and Benson & Hedges will cost nearly Rs 47 a pack.
ITC's Classic brand, one of the most popular brands in the premium end of the market, will be positioned as a brand cheaper than the two international brands.
India Kings, despite the company insiders' admission that its contribution to ITC's turnover is "negligible", will be retained as the premium brand because ITC hopes to launch it in the international market sometime in future through BAT.
The price of Classic, a huge grosser for ITC, will remain unchanged at Rs 42 per pack of 20 cigarettes. "The idea is to keep the market of Classic unaffected by BAT's international brands," said company sources. They, however, said the growth of the brand may slow down as a result of the launch of BAT brands.
Dismissing apprehensions about the success of BAT's brands in India in view of the dismal performance of other international brands in the country, sources said BAT's brands launched through ITC are unlikely to meet the same fate.
This is because ITC already has brands in that segment that are doing well, they said.
The launch of the international brands is bound to bring about fresh competition in the premium end of the market as most other Indian cigarette companies have been waiting for ITC's international launch.
S K Modi, who has a joint venture with R J Reynolds, is waiting on the wings to launch the Winston and Camel brands. The K K Modi-owned Godfrey Phillips, which has a tie up with Philip Morris, is also concretising plans to launch its partner's international brand Marlboro.
However, numerous other brands, including Rothmans and Pall Mall, have not been able to survive in or have performed indifferently in the Indian market.
Regarding ITC's proposed foray into sports goods, company sources said the move was designed to establish the brand to guard against any future ban on cigarette advertising. "If the government bans cigarette advertising in future, we can still promote our brands indirectly," said company officials, implying that the company might adopt the same approach as liquor companies, which indulge in indirect promotion of their brands.
Meanwhile, ITC sources dismissed the protest registered by the anti-tobacco lobby at its recent annual general meeting as "routine".