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Nepal Surya cigarettes.
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Chewing tobacco kiosk in Kathmandu.
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Cigarettes on displayat a retail point in Kathmandu, Nepal.
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Population distribution in Nepal.
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Mixing business and pleasure: the writer of this story at Base Camp Everest which is 6,000 meters above sea level.
Continuing our coverage of Himalayan Kingdom countries, in this article we go off the beaten path to report on Nepal.
By Dr Iqbal Lambat – c.e.o., Star Agritech International
Nepal, officially the Federal Democratic Republic of Nepal, is a landlocked country in South Asia located mainly in the Himalayas, but also includes parts of the Indo-Gangetic Plain. It has an estimated population of 26.6 million, made up of 125 castes (ethnic groups) who speak 123 different dialects. It borders China in the north and India in the south, east, and west while Bangladesh is located within only 27 km of its southeastern tip and Bhutan is separated from it by the Indian state of Sikkim.
Nepal has a diverse geography, including fertile plains, subalpine forested hills, and 8 of the world’s 10 tallest mountains, including Mt Everest (8,848 meters elevation), the highest point on Earth. Kathmandu is the capital and the largest city in Nepal. All visitors planning on scaling Mt Everest, arrive initially in Kathmandu before setting off to base camp to start their long adventure. Nepal is also the gateway to visiting Tibet.
From a business perspective, most businesses are managed by Indian nationals who are also the largest foreign investors in the country. Landlocked Nepal is served by road from the maritime port of Kolkata in India.
Tobacco market
Switching now to Nepal’s tobacco characteristics, here’s what we learned from the on-site visit – total domestic cigarette consumption is estimated at six billion sticks per year, which is extremely small when viewed in the context of a population of 26.6 million and per capita consumption. However, there is an equally large segment of alternative tobacco-type consumption consisting of chewing tobacco and paan, accounting for about the same volume of cigarettes, if not more. Chewing tobacco comprises pieces of strong Indian rustica tobacco varieties such as Kurnool and Eluru, which have nicotines in excess of 4%.
Paan is a preparation combining betel leaf with areca nut and tobacco, and is widely consumed throughout Southeast Asia, East Asia, and the Indian subcontinent. It is chewed for its stimulant and psychoactive effects. After chewing it is either spat out or swallowed.
The cigarette market is controlled by Surya Tobacco Company (STC), claiming to hold a share of over 70%. Surya is majority-owned by Indian superstar Indian Tobacco Company (ITC), based in Kolkata and market leader of the Indian cigarette market with a cigarette market share in India of over 80%. ITC is partially owned by British American Tobacco.
STC has operated in Nepal for over 40 years and has two manufacturing facilities in the country. Its major brand Surya comes in various formats, but its Surya Red and Surya Blue are combined the largest two brands by consumption in Nepal. These brands retail price are NPR350 (US$2.90) per pack of 20. A number of international brands are also present but without any investment focus, such as JTI’s Winston, Camel, and Mevius, and PMI’s Marlboro. These brands would target international tourists and would be found exclusively in Kathmandu.
Nepal imports all its tobacco essentially from neighboring India, as well as most of its non-tobacco materials.
Advertising restrictions are very high with no [outdoor] presence. The only space left for tobacco product branding are at the point of sale. Cigarette packs must carry a front, back, and side panel health warning (partly pictogram) of at least 75% of these surfaces. That leaves a small area for cigarette brand graphics.
Smoking can be accommodated in a number of indoor locations such as bars and restaurants as the atmosphere is relatively liberal, due to the high frequentation of tourists.
For tobacco companies operating in Nepal, the single most important aspect of the business is distribution. Most Nepalese live in the southern half of the country with the north relatively uninhabited due to the mountainous characteristics of that region. The population distribution map below illustrates this characteristic. In the main cities, distribution of fast-moving consumer goods is well organized with importers, distributors, wholesalers, and retailers. In the less developed part of the country, distribution is more passive, leaving it to small retailers to procure their supplies from the major cities. The weather also plays an important role as winter months see temperatures approaching freezing points, making logistics difficult.
While not a major cigarette market compared to its neighbors like China, India, and Bangladesh, Nepal nevertheless remains on everyone’s bucket list to see the roof of the world in a plane or helicopter visit over the Himalaya mountains. For this reporter, both were accomplished in February 2020!