Small Business Ideas & Project Opportunities in Manufacturing of Pan Masala, Tobacco, Zarda and Kimam. Profitable Small Business Ideas in India

Pan Masalais a balanced mixture of areca nuts (also known as supari), catechu, cardamom, lime, flavouring agents and some natural perfuming materials. It is widely used to remove the bad odour of the mouth by providing a fresh breath and comes in attractive user-friendly packets and containers. Despite its growing demand in rural areas, pan masala is gaining prominence in urban areas of India. It is prepared with precise measurements so as to maintain a balance of all ingredients while keeping in mind its taste and human health.

Pan Masala acts as a mouth freshener and unlike other Western synthetic pan masala which are made with chemical and petroleum ingredients, the Indian pan masala is considered safer. It is available in hygienic and attractive foil packets (sachets) and tins which are easy to store and carry.

Factors like its immense popularity, constantly increasing disposable incomes, convenient packaging, aggressive advertising campaigns by manufacturers and the large-scale switching of consumers from tobacco products to pan masala are currently encouraging the growth of pan masala market.

The Indian pan masala market reached a value of INR 36,523 Crores in 2016 and is further expected to reach nearly INR 81,992 Crores by 2022. The strong growth of the market can be attributed to a number of factors. As pan masala has been traditionally popular in India, it is consumed by all age groups and social classes in the region. Large population along with rising disposable incomes also provide a huge consumer base for pan masala products. Moreover, convenient packaging, easy availability, competitive marketing by manufacturers as well as the shift from tobacco to tobacco-free products have further fuelled the demand for pan masala globally. Although it has gained prominence in urban households of India, especially among adolescents, its demand is growing faster in rural households.

Among the various types of pan masala available in the Indian market, pan masala containing tobacco represents the dominating type accounting for more than 50% of the entire market. Pan Masala containing tobacco is followed by plain pan masala and flavoured pan masala. The Indian exports of pan masala are dominated by UAE accounting for around one-third of the total export values. UAE is followed by USA, Singapore, Afghanistan, South Africa, Saudi Arabia and Malaysia.

Factors like its immense popularity, constantly increasing disposable incomes, convenient packaging, aggressive advertising campaigns by manufacturers and the large-scale switching of consumers from tobacco products to pan masala are currently encouraging the growth of pan masala market.

Tobacco is a plant grown for its leaves, which are dried and fermented before being put in tobacco products. Tobacco contains nicotine; an ingredient that can lead to addiction. Tobacco contains the alkaloid nicotine, which is a stimulant, and harmala alkaloids.

Tobacco is one of the most economically significant agricultural crops in the world. It is a drought tolerant, hardy and short duration crop which can be grown on soils where other crops cannot be cultivated profitably. In India, Tobacco crop is grown in an area of 0.45 M ha (0.27% of the net cultivated area) producing ~ 750 M kg of tobacco leaf.

A large proportion of Indian economy is agro based in which Tobacco is one of the principal cash crops. The tobacco production and its allied products’ sales in the country have played a prominent role in the development of nation’s economy. India is the ~ largest tobacco market in the world in terms of tobacco consumption. The smokeless tobacco has historically been served as a tradition in India for many decades. Presently, the smokeless tobacco is the largest tobacco product category in India. On account of the fact the majority of the Indian tobacco consuming population consumes beedis, snuff and smokeless tobacco, including gutka, khaini and zarda, the tobacco market is majorly held by chewing and beedi tobacco products. Unlike other countries such as the US, UK and others where the production of cigarettes accounted for more than ~% of total production of tobacco related products, in India, the tobacco market is majorly controlled by the production of snuffs, guthka and others.

Tobacco and tobacco products generate around US$ 3.1 billion in revenues to the national exchequer by way of excise duty, and around US$ 768.69million by way of foreign exchange every year.

Indian tobacco is exported to about 100 countries. India exports unmanufactured tobacco primarily to Western Europe, South and Southeast Asia, East Europe and Africa. Western Europe is the key market for Indian tobacco exports.

The tobacco market is expected to witness growth, with a range of tobacco products such as cigarettes, cigars, kreteks, dissolvable tobacco, pipe, hookah-cigarettes etc. Presently, the drivers to this market are increase in consumer disposable income, improved new product development and innovation, and availability of premium products.

The U.S. tobacco market size was USD 100.3 billion in 2016 and is expected to grow further over the forecast period. Increasing consumer disposable income and the availability of superior products such as customized e-cigarettes and pipes are driving the market growth. Additionally, increasing consumption of tobacco products by the youth and female population has further elevated the demand for these products.

Zarda– a moist or dry chewing tobacco mixed with a variety of colourings, spice essences, and perfumes. Zarda is prepared by cutting tobacco leaves into small pieces and boiling them in water with slaked lime and spices until the water evaporates. It is then dried, and colouring and flavouring agents are added. Zarda may be chewed by itself, with areca nut or in betel quid quid. It is available in small packets or tins. In India it is used in two forms pilapatti and kalipatti.

Kimam' or 'Qiwam' as it is said is a liquid tobbaco mixture consumed with 'Paan'. Kimam (Qiwam) is made after adding tobacco with a lot of spices and some imported essences. Only experts can make it and there are only a few in India who know to make it. It is for taste and its smell is quite strong.

Kimam is a thick tobacco paste, it is also available as granules or pellets. To prepare kimam, the midribs and veins of tobacco leaves are removed, and the remaining matter is boiled in water. Powdered spices (saffron, cardamom, aniseed and musk) are added, and the mixture is stirred and allowed to macerate until it becomes a paste, from which granules and pellets are made. It is used in India, Bangladesh and Nepal.

Smokeless tobaccos are a group of tobaccos that are formally meant for consumption purposes apart from smoking. Several types of tobacco are used to sniff, chew, held in the mouth, or even applied on the skin. Research shows that quitting smokeless tobacco can be as difficult as quitting smoking tobacco. While less consumed than smoking tobacco, it is still a very widely used and sold commodity in the world. Both are known to be interrelated among consumers, as those who smoke cigarettes are more likely to take up smokeless tobacco and vice versa. Statistics also point to males consuming more smokeless tobacco than females.

The smokeless tobacco market is anticipated to grow due to growing smoking bans and awareness associated with cigarette consumption. The product choices are expected to evolve based on ease of use, cost and regulatory sights. Therefore, the smokeless tobacco market estimation and forecast has been initiated with an exhaustive set of assumptions, following which market size information for both key geographical areas and key products has been provided.

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