Profitable tobacco-free zone

Venkatachari Jagannathan reports on a tobacco-free chew and cigarette launched by Dalmia Consumer Care Private Limited

When managing director Sudershan Banerjee (56) of Dalmia Consumer Care Private Limited says that his company is in the oral gratification space, it takes some time to understand what he means. What is unique about Dalmia Consumer Care is that it is rolling out the world's first non-tobacco beedi, and paan- (betel leaf) flavoured tobacco-free gumlets, Chabaaza.

Banerjee is naturally upbeat when he says that Dalmia Consumer Care sells around one million sticks per day. This is also because Vardan is priced similar to the traditional beedi. The beedi packs come in three sizes 20 sticks (price Rs4) 10 sticks (Rs2) and 5 sticks (Re1).

Banerjee estimates the domestic tobacco products market size to be around Rs42,000 crore ($9.04billion) — beedis Rs12,000 crore ($2.58 billion), cigarettes Rs10,000 crore ($2.15 billion) and chewing (tobacco and non-tobacco)Rs30,000 crore ($6.43 billion). "The global tobacco market is around Rs900,000 crore ($193 billion)."

The company is also into satisfying the oral cravings of the neighbouring countries. While export opportunities for Vardan are being actively pursued, the paan-flavoured Chabaaza is exported to Bhutan.

The company also plans to enter other Asian countries. According to Banerjee there are enquiries from Japan, China and other countries for both the products.

It is no mean achievement for the year-old fast moving consumer goods (FMCG) company Dalmia Consumer Care to reach its beedis to around 5 lakh outlets in 900 cities though it had taken the Coimbatore-based Dalmia Centre for Research and Development 22 years to bring Vardan to the huge domestic beedi market.

The center has applied for a global patent for this formulation.Says the centre's head, Dr P M Murali, "The beedi is made from plant leaves that are substitutes for tobacco. Though Vardan induces the pleasuring-giving properties of tobacco, is nicotine-free, contains no addictives and is free of the cancer-causing nitrosamines."

According to him, Vardhan is non-addictive and less harmful for the active and passive smoker. The formulation successfully replicates both the chemistry (sweetness, moisture, burning quality, number of inhalations and pH values) and satiability indices (mouth feel, feeling in the throat, sensual feeling, and satisfaction) characteristics of tobacco.

"Mapping the complete smoke chemistry posed a major challenge initially," recalls Dr. Murali.

Adds Banerjee, "Vardan provides the lifestyle choice for those who are willing to quit tobacco but are unable to do so due to their dependence on nicotine since no alternative was available till date."

Though the competitive pricing of Vardan is one way to attract beedi smokers, the bigger and tougher challenge is to address the mind-set that pleasure can be derived without tobacco. And addressing this successfully is what would determine the success or failure of Dalmia Consumer Care.

"The success lies in convincing and educating consumers that there can be a trade-off between pleasure and pain. A different pleasure can take away the pain," remarks Banerjee.

With tobacco consumption higher in the rural areas Dalmia Consumer Care is investing heavily there in creating awareness about the tobacco-free alternatives and the ills of tobacco. The promotion is done at rural melas (fairs), haats (weekly village markets), in tribal areas and self help groups.

Also regional preferences and tastes are taken into consideration while coming out with the campaign strategy.

Given the ban on cigarette advertising will the company enter the market with tobacco-free cigarettes as the same formulation could be rolled inside a thin paper?

Answers Banerjee, "Tobacco-free smoke reflects the march of a new technology. It is true that the formulation is tobacco-free and could be presented in different options — cigarettes and beedis. When we are ready, we will deliver it in a paper wrap and could also call it, the tobacco-free Vardan cigarette."

More than the beedis, it is Chabaaza that is seen as being heavily promoted by Dalmia Consumer Care through its commercials being aired on major channels. The television advertising covers over three thousand spots — more than 100 spots per day — across national and regional channels. It also launched below-the-line advertising campaign, the company recently conducted an anti-spitting campaign in Mumbai.

Launched in December 2003 the Re1-Chabaaza is a fusion of chewing gum and paan flavour. Resembling minitiature chewing gum pellets, Chabaaza pits itself against the various pan masala / gutka (tobacco chew) brands as it provides a similar taste and feel for the mouth and hand.

According to Banerjee unlike other products, chewing the tobacco-free Chabaaza does not result in any cuts or burns (chale) leading to oral cancer. The product also does not contain areca nut or other carcinogenic substitutes like gambier and magnesium carbonate.

Initially, launched in seven cities, Chabaaza's distribution has expanded to several cities and towns in keeping with its target of reaching it to two million paan-selling outlets.

While Banerjee declines to reveal any numbers, it is learnt the company has registered around Rs15 crore sales with the two products.