Are you excited by the huge profits of cigarette distributors?

 

The cigarette industry in India is thriving, with several well-known companies operating within it.

 

However, entering this regulated industry requires careful consideration and attention to licensing and legal requirements.

 

Some of the prominent cigarette companies in India include:

 

• ITC LIMITED (Imperial Tobacco Company) (84.3% Market share in Cigarette industry)
• Godfrey Phillips India Ltd (12.9% Market share in the Cigarette industry)
• VST Industries
• DDTC (Dharmani Deni Tobacco Company)
• GTC Industries

 

Before entering this venture, you must understand the legal and financial responsibilities associated with becoming a cigarette distributor.

 

 

Now, let's explore the processes involved in ITC

 

 

 

ITC:

 

ITC, also known as Imperial Tobacco Company, is a diversified corporation in India with various business interests.

 

Its tobacco division is particularly renowned for manufacturing and selling cigarettes, alongside its ventures in FMCG, hotels, and agri-business.

 

ITC produces several cigarette brands, including:

 

• Gold Flake
• Navy Cut
• Classic
• Menthol
• Red & White

 

To get an ITC distributorship, you need to be in the FMCG category because the company holds 71.8% of the FMCG market.

 

According to some sources, not one new dealer was added.

 

Even the PMO used to put pressure on them, but the system and policies are very clear.

 

However, it's worth giving it a try. If you aspire to become a distributor for ITC, you must follow these steps:

 

 

 

 

Step-1:

 

According to sources, ITC's process was offline pre-COVID but changed due to the pandemic. The entire process can now be completed online.

 

Phone Number:- 1800 345 8152 / 9647584616

 

Email:- contactus@itc.in  

support@itcpartner.com

  

Website:-

https://www.itcportal.com/contact-us.aspx

https://itcpartner.online/applynow.html

https://www.indiacustomercare.com

https://www.itcportal.com/contact

 

 

Step-2:

 

After clicking on this link, a window will open where you can find the contact information of ITC Distributorship.

 

Make sure all the details are filled out and then you are registered.

 

 

Step-3:

 

ITC published a list of locations on its website where it intends to establish its distributorship. The information is then available to the public.

Your application will be confirmed by email if the profile you provide is suitable for ITC preferences.

 

 

Step-4:

 

After that, an ASM (Area Sales Manager) will be assigned by ITC to inspect your location and background, and then they will check your eligibility for becoming a distributor or not.

 

In which they will inspect a few details, like-

 

Personal details:

• Should be an Indian Citizen.
• Age above 25 years old.
• Should have experience in FMCG, Etc.
• Experience in the FMCG sector

 

Documents required:

• PAN Card
• Adhar Card
• Voter ID Card
• Residential Proof
• Ration Card
• Rent Agreement
• And once you register yourself, there are some other documents mentioned that you should also take a look at.

 

Financial background

 

Location verifications

 

 

 

Warehouse and storage security:

• Godown Area (1500 sq. ft – 4000 sq. ft) and office area 100 sq. ft.
• Commercial vehicle for distribution service. Manpower (Accountant, Marketing manager, Driver, helper, Loader & Unloader)
• Basic Infrastructure (Computer, Printer, CCTV, Inverter, Table, chair, etc), Etc.

 

Government verifications

 

 

Step-5:

 

After all the necessary verifications, ASM will share your details with ITC management. If your profile meets their requirements, they will then offer you their distributorship.

 

 

As we all are aware about this industry, it’s not everyone's cup of tea.

 

ITC does not give a distribution of cigarettes only. You must apply for the distribution of all FMCG products.

 

So, here are some important factors that will help you in this process:

 

• Market Research: The first and foremost step is to conduct thorough market research.

 

• Meet top distributors in the town/ area
• Visit the key markets
• Meet at least 10 retailers, 10 B class outlets, 10 C class outlets
• Understand retailers expectation
• Solve the distribution gaps

 

 

• Capital Required: For small distribution, it may cost you 40 Lakhs - 5Cr.
• Basic Infrastructure: 40 Lakhs
• Commercial vehicle: 10 Lakhs - 20 Lakhs (No. of vehicle depends on your route)

 

• Initial stock purchase: 10 Lakhs

 

• Working capital: 10 Lakhs

 

It depends on the size of operations you're looking to handle and how much work the company and area sales managers (ASM) are willing to allocate to you.

 

 

• Profit Margin:

 

Profit margin is less than 1.5%. Even though this seems like a small amount, since cigarette sales are mostly cash-only, the invested money generates daily returns.

 

Due to the daily rotation of cash, the amount earned becomes very high for distributors when compounded monthly.

 

The margin for Mills, a cheaper grade, is relatively lower than for Gold Flake.

 

 

• ITC distributors in the same area:

 

If there are existing ITC Distributors within 4-5 km of your planned area, then it will be difficult for you to succeed with a distributorship.

 

 

 

• Contact to ASM:

 

Area Sales Managers (ASMs) play a vital role in distribution. They are directly connected with ITC teams and have access to important process insights, making the process easier.

 

ASM will guide you through the procedure and provide ideas to make your profile stand out from other applicants.

 

ASM can assist in coordinating with potential retailers and wholesalers in your area. It will be easier for you to complete the process if you have a strong connection with ASM.

 

 

 

• Licenses:

 

Kindly note that you need to apply for the licenses that are listed below:

 

• Shop Act License
• FSSAI
• GST Number
• Gumasta License

 

 

• Warehouse and Godown area:

 

Distribution of goods is a critical step in the supply chain, so warehouse requirements in distributorship play a crucial role.

 

  Ideally, the warehouse should be located near major transportation routes to minimize transit times and ensure efficient delivery to retailers and end users.

 

If you want to set up your distributorship in a rural area, you will need 500 to 1000 sq. ft.

 

But, if you want to set up your distributorship in an urban area or city side, you will need 1500 to 2000 Sq. ft.

 

 

• Potential wholesalers and retailers:

 

Having a connection with potential retailers and wholesalers is crucial in the supply chain, as both play integral roles in bringing products to end consumers.

Here are some of the key types of retailers in this sector include:

• mall convenience stores
• gas stations
• tobacco shops
• Duty-Free Shops
• Liquor Stores
• other retail outlets that sell cigarettes

 

Research the retailer's business, target market, and current product offerings. Tailor your approach to show how your products can enhance their offerings.

 

 

• Transportation:

 

Reaching out to transporters is an initial step in building a strong and productive partnership, ensuring that your distribution requirements are met with dependable and efficient transportation services.

 

Here are steps to effectively reach out to transporters:

• Identify Transportation Needs
• Gather Contact Information
• Clearly Define Your Requirements
• Evaluate Their Capabilities
• Negotiate Terms
• Maintain Ongoing Communication

 

Here are a type of transportation is required which is required in the market to transport goods between distributors and retailers:

• Road Transport (Trucking) {LTL (Less Than Truckload) or FTL (Full Truckload)}
• Courier Services
• Local Distribution Networks
• On-Demand Delivery
• Last-Mile Delivery Services (Optimise your deliveries with specialized vans or smaller vehicles for localized deliveries)

 

 

In FMCG transport, cost-effectiveness, efficiency, and the ability to cater to various quantities, from small to large, are often important considerations between distributors and retailers.

 

The mode of transportation will be determined by factors such as the urgency of delivery, the volume of goods, and the geographical coverage required.

 

 

 

Conclusion:

 

The path to becoming a cigarette distributor is not an easy one, but with the right advice and deep research, you will be able to land an ITC distributorship.

 

Every aspect of the process is discussed in brief in this blog, from the steps to the vital factors.

 

Also, understanding the legal and financial responsibilities associated with becoming a cigarette distributor is important. Consult a CA while becoming a cigarette distributor to understand legal and financial responsibilities.