INDIAN INCENSE STICK INDUSTRY

MARKET SURVEILLANCE REPORT

Kartikeya Verma

Industry Overview

India Agarbatti Market Size is worth Rs 2400 cr – 70 Billionn sticks ~Bamboo – 35,000 mts/annum ~Rawbatti – 60,000 mts/annum

Mostly hand crafted by cottage industries and NGOs in India

Growing at a rate of10% p.a

Exports- Rs 275 cr Use of Incense

~India : Worship ~Overseas : Ambience creation Aroma Therapy

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Agarbatti Industry

Highly Fragmented Industry

Market Products

Highly Fragmented 200 players with 400 brands

Industry dominated by Local Players

Top five players account for 20% value

Top five pack /price combinations account for only 25% of the industry

Large number of fragrances are marketed

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800 crores Export

200 crores Domestic 1000 crores

The Market

2400 crores

1994 2010

Manufacturing Units

800 Registered 3000 Unregistered 400 Exporters

Unorganised sector and highly fragmented

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Export values

Series10

500

1000

1500

2000

2500

3000

3500

4000

Export

2005-06 2006-07 Series 3

Mill

ion t

ons

Series10

5

10

15

20

25

30Profit

1989-90 1993-94 2003-04 2004-05 2005-2006

Rs.

In b

illio

ns

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Export Market

4%

7%

4%

15%

3.5%

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Consumption Patterns

Ur-ban39%

Ru-ral

61%

Urban

Rural

Low involvement product

No brand loyalty

Agarbattis are low involvement products whose purchases are often impulsive

Purchases based on packaging, fragrance and pricing

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Cost Structure

Masala 10%

Non-masala 60%

Packaging & Marketing

30%

Cost Distribution Masala 10% Non-masala 60% Packaging & Marketing

30%

2%

• Raw Bamboo

8%

• Masala /Non-Scented Agarbatti

30%

• Perfumes

30%

• Packaging Material

20%

• Marketing

10%

• Miscellaneous

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Marketing Approach

Superior fragrance experience [Conforms to IFRA norms]

Consistently superior product experience Inputs for Priority Markets Attractive & differentiated packaging – Fragrance locked Product Quality rating Systems Brand Health Tracker

A superior fragrance development and selection procedure

DEVELOPING BRAND PREFERENCES

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Current market player

ITCMangaladeep

N. Ranga Rao & SonsThe Incense Group

Launched in 1948 Market leader in India with

Current market share 8% Exports to 40 countries Its Brand

Cycle agarbatti Lia agarbatti Flute agarbatti Rhythm agarbatti

Launched its brand in year 2004 ITC the second largest player with

market share of almost 5% Fastest growing brand ITC signed a MOU with Orissa and

Tripura govt. for sourcing raw materials

It provide employment for 10000 women in rural regions

2.1.

Others old Brands

Moksha Agarbatti Cofounded in year 1966 Bangalore Based Offer 35 fragrance

Nandi Agarbatti Established in 1936 Bangalore based Production capacity

1000 tons

Hem Incense Established in 1983 Production facilities at

Mumbai & Bangalore Bulk Exporter

Devdarsadan Established in 1954 Manufactures Dhoop,

Agarbatti & Hawan Samagri

Kisan Established in 1998 Located in Sujabad,

Parao, Varanasi

ITC Incense Business Value Chain

Bamboo

Charcoal Jiggat

Raw Batti rolling

Perfuming

Packaging

Marketing & Distribution

NGOs

SSIs

ITC Limited

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Raw Incense NGO Based Supply Chain

ITC Limited Vendors

NGO

Women inDifferentVillagesSpread

over andof more

than 100Sq. Km

Order

Supplies

Raw Material Supply

Finished goods

Brought Back

Kartikeya Verma

Thank you