GOLD FLAKE

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CHAPTER I

GOLD FLAKE

Introduction

"I like to think of fire held in a man's hand.   Fire, a dangerous force, tamed

at his fingertips.  I often wonder about the hours when a man sits alone,

watching the smoke of a cigarette, and thinking.  I wonder what great things

have come from such hours.  When a man thinks, there is a spot of fire alive in

his mind--and it is proper that he should have the burning point of a cigarette as

his one expression."

A cigarette is a product consumed via smoking and manufactured out of

cured and finely cut tobacco leaves, which are combined with other additives,

then rolled or stuffed into a paper-wrapped cylinder generally less than 120 mm

in length and 10 mm in diameter. The cigarette is ignited at one end and allowed

to smolder for the purpose of inhalation of its smoke from the other which is

usually filtered at the end and is usually inserted in the mouth. They are

sometimes smoked with a cigarette holder. The term cigarette as commonly

used, refers to a tobacco cigarette but can apply to similar devices containing

other herbs, such as cannabis. They are colloquially known as 'cigs', 'smokes',

'ciggies', 'straights', 'cancer sticks', 'death sticks', 'coffin nails' and 'fags'.

Cigarettes are proven to be highly addictive, as well as a cause of multiple types

of cancer, heart disease, respiratory disease, circulatory disease and birth

defects. A cigarette is distinguished from a cigar by its smaller size, use of

processed leaf, and white paper wrapping. Cigars are typically composed

entirely of whole leaf tobacco. Commercially manufactured cigarettes are

relatively simple objects consisting mainly of a tobacco blend, paper, PVA glue

to bond the outer layer of paper together, and often also a cellulose acetate

based filter.

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GOLD FLAKE

In the beginning of the 16th century, beggars in Seville, Spain developed the

first paper-rolled cigarettes when they collected discarded cigar butts, shredded

them, and rolled them in scraps of paper. Although the Spanish elite first

dismissed them as recycled garbage, these cigarillos, or little cigars, eventually

gained popularity during the 18th century. Cigarette smoking spread to Italy and

Portugal, and eventually to the rest of Europe and into Asia. Cigarettes were

largely unknown in the English-speaking world before the Crimean War, when

British soldiers began emulating their Ottoman Turkish comrades, who resorted

to rolling their tobacco with newsprint. The cigarette was named sometime in

the 18th century.

During World War I and World War II, cigarettes were rationed to soldiers.

During the second half of the 20th century, the adverse health effects of

cigarettes started to become widely known and text-only health warnings

became commonplace on cigarette packets. The United States has not yet

implemented graphics-based cigarette warning labels, which is considered a

more effective method to communicate to the public the dangers of cigarette

smoking. Canada and Australia, however, have both textual warnings and

graphic visual images displaying, among other things, the damaging effects

tobacco use has on the human body. The cigarette has evolved much since its

conception; for example, the thin bands that travel transverse to the "axis of

smoking" (thus forming circles along the length of the cigarette) are alternate

sections of thin and thick paper to facilitate effective burning when being

drawn, and retard burning when at rest. Synthetic particulate filters remove

some of the tar before it reaches the smoker.

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GOLD FLAKE

Companies like Marlboro a brand of Cigarette made by Altria which started

manufacturing cigarettes in 1924 gave advertisements that Marlboro is a

‘women’s cigarette’ based on the slogan “Mild as May”. It became the most

popular brand of United States in 2001. Marlboro became so popular that its

sales never came down in the States and earned huge revenues. It started giving

sponsorship to motor sports and racing cars. It was the main sponsor for Ferrari

Formula One car and Yamaha in Super Bike Racing. It became famous globally

till 2003 through Ferrari when it won the world championship of Formula One

Racing. In mid-2006, special "racing editions" of Marlboro Red were sold in the

UK, with a Ferrari-inspired design, although the Ferrari name and badge were

not used.

Mostly people smoke cigarettes for pleasure or because of frustration or

problem. Once they start they get addicted to it. It is very difficult to overcome

the habit of smoking till one becomes used to it. In foreign countries most of the

people started smoking cigarettes because of celebrities smoking in films and

serials. This gave a boost to the cigarette manufacturing companies by increase

in their sales and also promotion of the product as the demand increased. Most

countries in the world have a legal smoking age of 18. Seven exceptions are

Austria, Belgium, Denmark, Germany, Portugal, the United Kingdom, and The

Netherlands, where the age is 16.

Since January 1, 2007 all cigarette machines in public places in Germany

must attempt to verify the customers age by requiring the insertion of a debit

card. Turkey, which has one of the highest percentages of smokers in its

population, has a legal age of 18. Another curiosity is Japan, one of the highest

tobacco consuming nations, which requires purchasers to be 20 years of age.

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GOLD FLAKE

However, due to the prevalence of cigarette vending machines in the most

public of places the effectiveness of an underage ban is in doubt.

In other countries, such as Egypt or India (especially Kerala) it is legal to

use and purchase tobacco products regardless of age. Approximately 5.5 trillion

cigarettes are produced globally each year by the tobacco industry, smoked by

over 1.1 billion people, which is more than 1/6 of the world's total population.

Many governments impose restrictions on smoking tobacco, especially in

public areas. The primary justification has been the negative health effects of

secondhand smoke. Laws vary by country and locality. In India the ban on

tobacco and cigarettes has been implied since 2002, but still the companies

continue to manufacture cigarettes as the smoking habits of the consumers do

not change. Through sponsorship these companies try to publish their brand

name and promotion of their product. Cigarette advertisement is also done

through movies where the celebrities smoke cigarettes in the film. This also

helps in brand and sales promotion. The Indian government is trying hard to

impose strict actions against these advertisements and promotion. Even though

by imposing strict tax rate these companies are able to continue their business as

1.1 billion people of the world consume cigarettes. In many parts of the world

tobacco advertising and even sponsorship of sporting events has been outlawed.

The ban on tobacco advertising and sponsorship in the EU in 2005 has

prompted Formula One Management to look for races in areas that allow the

tobacco sponsored teams to display their livery. As of 2007, only Ferrari retains

tobacco sponsorship, continuing their relationship with Marlboro until 2011. In

spite of the ill effects and health hazards people continue to smoke cigarettes for

pleasure or because of habit. This habitual of the people helps the companies to

overcome the ban and advertisement on cigarettes and tobacco.

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GOLD FLAKE

About the cigarettes Industry of India

The Cigarette Industry is one of the oldest industries in India. It is an

important agro-based industry. It is highly labour intensive and provides

livelihood to about five million people directly and indirectly. Cigarette is an

item falling under the First Schedule to the Industries (Development &

Regulation) Act, 1951 and requires an industrial license.

The cigarette industry has always been on the receiving end when it comes

to imposition of taxes and duties in the financial budget of the country. The

industry has been reeling under ever-increasing excise duties and innovative

form of taxes like luxury tax. Also, due to the high taxes in the country, the

competitiveness of the Indian cigarette manufacture is adversely affected in the

global market. Its growth is being further stifled by the imposition of ban on

smoking at public places and ban on advertisements. In addition to this,

increasing awareness about harmful effect of smoking and lawsuits in western

countries has made the entire scenario pretty gloomy for the industry. This leads

to increased government regulation and public litigation and a reduced ability to

promote the product. In such a scenario, cigarette companies in India are going

in for unrelated diversification. Also, with the increasing threat to the tobacco

industry as a whole and decreased consumption levels of cigarettes, need gaps

in the market are being met by new products like non-tobacco beedi, paan-

(betel leaf) flavored tobacco-free gum lets , and substitutes and tobacco patches

like ‘Click’ which are targeted at the traditional cigarette consumer base. 

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GOLD FLAKE

At present, there are 19 units in the organized sector engaged in the

manufacture of cigarettes with a total installed capacity of about 147.377 billion

pieces per annum. The production of cigarettes during 2001-02 was 60577

million sticks. During the current year i.e. 2002-03 (April 2002 to December,

2002) the production has been 43198.20 million sticks. In terms of volume, bids

dominate the Indian market for tobacco products.

India is the second largest producer of tobacco in the world after China. It

produced 572 million kilograms of tobacco in 2002-2003. India only holds a

meager 0.7% share of the US$30 billion global Import-Export trade in Tobacco,

with cigarettes/cigarette tobaccos accounting for 85% of the Country's total

tobacco exports.

The tobacco industry holds tremendous potential for India. For the

government, it means excise duties and export revenues, and for the Country in

general, it translates into huge employment opportunities. Despite being the

second largest producer, India is only the ninth largest exporter of tobacco and

tobacco products in the world. Out of the total tobacco produced in India, only

one-third is flue-cured tobacco suitable for cigarette manufacturing. Most of the

tobacco produce is suitable for the manufacture of chewing tobacco, bidis and

other cheap tobacco products, which have no demand outside the country. There

is only an export demand for flue-cured tobacco, which is used for cigarette

manufacturing.

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GOLD FLAKE

If India adopted a rational tax policy for the tobacco industry that

encouraged the growing of export tobacco, tobacco farmer income would

increase and export revenue would grow. If India adopted China's tax policy on

tobacco, tax revenue could rise from the current Rs 6,031 crores to Rs 54,000

crores. China's economy-oriented tax policies have given cigarettes 100% share

of domestic tobacco consumption. This strong domestic base has proved to be

conducive to exports as well as revenue generation. The Indian tobacco industry

makes a very substantial contribution to employment. 35 million people are

directly or indirectly engaged in the production and selling of tobacco &

tobacco products as shown in the table below.

In terms of volume, bidis dominate the Indian market for tobacco products.

This traditional Indian smoke has shown steady growth during the review

period, although manufacturers report that sales are not as high as in the 1980s.

Cigarettes dominate the manufactured tobacco products market. This invaluable

study analyses the market for cigarettes in India over the time period 1998-2002

and provides forecasts to the year 2007. This title investigates key trends and

developments and can be used to evaluate competitive threats; identify strategic

partners and acquisition targets; analyse market and brand share trends and

forecast growth opportunities.

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GOLD FLAKE

About the Company

ITC was incorporated on August 24, 1910 under the name of 'Imperial

Tobacco Company of India Limited'. The Company's ownership progressively

Indianised and the name of the Company was changed to I.T.C. Limited in

1974. In recognition of the Company's multi-business portfolio encompassing a

wide range of businesses of Cigarettes & Tobacco, Hotels, Information

Technology, Packaging, Paperboards & Specialty Papers, Agri-Exports, Foods,

Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in the

Company's name were removed effective September 18, 2001. The Company

now stands rechristened 'ITC Limited'.

ITC is one of India's foremost private sector companies with a market

capitalization of nearly US $ 15 billion and a turnover of over US $ 4.75 billion.

ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the

World's Most Reputable Companies by Forbes magazine, among India's Most

Respected Companies by Business World and among India's Most Valuable

Companies by Business Today. ITC also ranks among India's top 10 `Most

Valuable Company Brands', in a study conducted by Brand Finance and was

also published by the Economic Times. ITC employs over 21,000 people at

more than 60 locations across India. The Company continuously endeavors to

enhance its wealth generating capabilities in a globalising environment to

consistently reward more than 4,65,000 shareholders, fulfill the aspirations of

its stakeholders and meet societal expectations.

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GOLD FLAKE

ITC pioneered the cultivation and development of Leaf Tobaccos in India.

ITC has helped the Indian farmer grow quality leaf tobaccos and linked him to

global markets. ITC is the largest buyer, processor and exporter of leaf tobaccos

in India - creating a global benchmark as the single largest integrated source of

quality tobaccos. ITC serves in 48 countries across more than 69 destinations.

ITC buys nearly 50 per cent of all tobacco types grown in India. ITC's Green

Leaf Processing plants at Chirala and Anaparti in Andhra Pradesh, the tobacco

hub of India, are benchmarked with the best in the world. ITC process and

deliver 120 million kilo grams of high quality tobaccos annually. ITC's

collaboration with related Government agencies has helped develop new

varieties of tobaccos and explore new areas for tobacco cultivation.

ITC is the market leader in cigarettes in India. It's highly popular portfolio

of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy

Cut, Scissors, Capstan, Berkeley, Bristol and Flake. The Company has been

able to build on its leadership position because of its single minded focus on

value creation for the consumer through significant investments in product

design, innovation, manufacturing technology, quality, marketing and

distribution. In the extremely competitive US market, ITC offers high-quality,

value-priced cigarettes. ITC's cigarettes are produced in its state-of-the-art

factories at Bangalore, Munger, Saharanpur and Kolkata. These factories are

known for their high levels of quality, contemporary technology and work

environment.

ITC is the leading player in domestic cigarette market. The company

commands over 60% market share both in value and volume terms. The

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GOLD FLAKE

company has some of the leading brands of cigarettes like Wills, Gold Flake etc

in its portfolio. The cigarette business forms the bread & butter business of the

company. It gets more than 85% of revenues. The company has slowly and

steadily nurtured its brands over the years to secure this position. With margins

as high as 40% in cigarette business the company has generated huge amount of

cash from its operations and is thus facing the problem of plenty. The problem

is not just restricted to ITC it is through for other tobacco companies also.

Though ITC's management has good track record in managing its cigarette

business, its report card on diversification and success of these unrelated

business has not been good.

Achievements

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GOLD FLAKE

Achieved five star Health and Safety Rating from the British Safety

Council for its cigarette factories at Bangalore, Munger, Kolkata and

Saharanpur and the "Sword of Honor" for Bangalore & Saharanpur for

2006-07.

Bangalore, Kolkata and Saharanpur cigarette factories won the

prestigious Greentech Safety Gold Award for the year 2007 in the

manufacturing sector. These awards are in recognition of the high

level of performance that the units have achieved in Environment

Health and Safety (EHS). Saharanpur along with Kolkata and Munger

factories were honored with the same award in 2006.

Bangalore Factory has also received the Platinum Award for

outstanding achievement in safety management in 2006.

Bangalore Factory has won the "Safety Innovation Award 2006" for

Innovative Safety Management System from the Safety & Quality

Forum (Institution of Engineers) and also Unnatha Suraksha Puraskara

Award from NSC Karnataka Chapter.

The cigarette factory at Kolkata was awarded the "1st National

Security Today Award 2005" in the category of Best Maintained Fire

Safety System.

Bangalore, Munger & Kolkata have won the prestigious Greentech

Environment Excellence Gold Award for the year 2006.

Munger factory won the Excellence in Water Management Award

from CII-GBC for 2006.

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GOLD FLAKE

GOLD FLAKE

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CHAPTER II

GOLD FLAKE

Gold Flake is a widely-sold cigarette brand in India and Pakistan. It is sold

in various varieties, including Gold Flake Kings (84mm), Gold Flake Lights,

Gold Flake Filter (Filter tipped) and Gold Flake (plain). It is a well-positioned

brand in India and is the market leader in its segment. This brand is owned,

manufactured and marketed by ITC which is leader in cigarette industry in

India. Other popular cigarette brands owned by ITC are Wills, Scissors. It is

sold in three varieties. Gold Flake Kings is the largest selling brand of cigarettes

in India. It has a mild flavour. Goldflake Filter King Size Lights (84mm)

Goldflake lights is milder than Gold Flake and contains comparatively less

nicotine. Goldflake Filter (Small) Goldflake Filter (small) has the strongest

flavour amongst the three brands.. A pack of 10 costs about 34 Indian rupees.

Goldflake Plain (Filter less). The very original Goldflake is simply known as

Gold Plain or Plain in southern markets. It is the strongest of all.

The cigarette market in India has 4 players ITC, a British American

Tobacco (BAT) affiliate, is the largest cigarette manufacturer with 66% of the

market share. Godfrey Phillips India (GPI), a Phillip Morris affiliate, and Vazir

Sultan Tobacco (VST), a BAT affiliate, each have 13% of the total market

share. Golden Tobacco Company (GTC) has 8% of the market share. There are

lots of popular brands which are present in the Indian market. They are divided

into 3 segments which are super premium, premium, and bingo segments. Few

of the brands in these categories are: - Super premium - Wills Insignia

Premium- Wills Classic/Milds Wills Navy Cut, Wills Silk Cut, Gold

Flake/Lights, four square Bingo– Bristol, Red and White.

Origin of the Name

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GOLD FLAKE

Goldflake was neither a brand nor a process of manufacturing cigarettes.

The word "Gold Flake" refers to cigarettes made using 'bright rich golden

tobacco'. Brands other than wills gold flake are Bacons' Gold Flake, Hignett's

Golden Flaked Honey Dew, Salmon and Gulckstein's Gold Flake.

Launch and Promotion

ITC launched the brand Gold flake in India in the seventies. The source of

the positioning of Gold Flake can be traced back to its early days. In the

Seventies, India was a country of the genteel rich. People aspired to be

honorable and genteel. The lifestyle of the upper class was what the customers

aspired for. The initial ads said, “Wherever you go they are good”,” Having fun

wish you were there” “Worth its length in gold”, then came the Gracious People

Campaigns “For the Gracious People” as the headline followed by, “A touch of

Gold”, with the headline "A tribute to the Gracious People".

Gold Flake had been traditionally positioned as a premium cigarette. It

targeted adult, male SEC A category smokers. It was meant to be a cigarette for

the best and the rich – the gracious people of India. It did not differentiate itself

specifically from other brands. The brand was compared with Gold for the

quality and purity of experience. Advertising emphasised this comparison to

gold. The statement – “For the gracious people” summed the core of the brand.

The gracious people as defined by the brand were the premium class they were

successful, elegant, and responsible, and had a sense of purpose.

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GOLD FLAKE

The consumer was bounded in the Indian ethos and roots. He was perceived

to be unapproachable and sociable only in his high class. ITC's share of filter

cigarettes in the country is more than 70%. In pursuit of international

competitiveness, ITC has launched four brands - Checkers, Hi-Val, Royale

Classic and Gold Crest - in the extremely competitive US market. Recently ITC

has launched Royale Classic, Gold Cut and Scissors Filter Kings cigarettes in

the Middle East. The response to these brands has been encouraging.

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GOLD FLAKE

Hierarchy of the Company

17

CHAIRMAN Y.C Deveshwar

India Tobacco and Cigarette Division

Chief ExecutiveKurush N Grant

Indian Leaf Tobacco Development Division

Divisional Chief Executive     S Janardhan Reddy

Head, HRA Dutt

VP, Marketing & R&D

K C Biddappa

Head, Processing & TechS Ramakrishna

Ex-VP, MarketingS M Ahmad

Ex-VP, Technical & HRT V Ramaswamy

Ex-VP, Finance & MISR Tandon

GOLD FLAKE

Manufacturing Process

Commercially manufactured cigarettes are relatively simple objects

consisting mainly of a tobacco blend, paper, polyvinyl acetate glue (PVA) to

bond the outer layer of paper together, and often also a cellulose acetate based

filter. While the assembly of cigarettes is straightforward, much focus is given

to the creation of each of the components, in particular, the tobacco blend,

which often contains over one hundred ingredients.

Cigarette rods are manufactured at high rates of speed using a cigarette

making machine having a tongue which is equipped such that water is

continuously fed there through in order to exit the surface of the tongue which

contacts a tobacco filler stream passing through the garniture region of the

cigarette making machine. The process of introducing water through the tongue

during a cigarette making operation allows the manufacture to produce a

continuous cigarette rod of controlled integrity. For example, cigarettes of

controlled density and firmness, and having very low amounts of hard spots,

soft spots and loose ends, can be manufactured. The process provides for the

manufacture of cigarettes at high speeds, and for the manufacture of cigarettes

having high filling capacity tobacco blends. For example, cigarettes having

blends comprising relatively high levels of volume expanded tobacco can be

manufactured efficiently and effectively.

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GOLD FLAKE

For manufacturing process of cigarettes includes six steps. It is a very long

process. As the demand for cigarettes is increasing the demand for tobacco has

also being increased. Cigarettes are being differentiated according to their

smoothness, hardness, quality, size, tobacco content, etc. but the basic process

for manufacturing is the same. The six steps for manufacturing cigarettes are:

1. Tobacco Harvest.

2. Tobacco Curing.

3. Tobacco grading and buying.

4. Primary processing.

5. Cigarette manufacturing.

6. Packaging.

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GOLD FLAKE

1) Tobacco Harvest :

ITC pioneered the cultivation and development of Leaf Tobaccos in India.

ITC is the largest buyer, processor and exporter of leaf tobaccos in India -

creating a global benchmark as the single largest integrated source of quality

tobaccos. Serving customers in 48 countries across more than 69 destinations,

ITC co-creates and delivers value at every stage of the leaf tobacco value chain

and also process and deliver 120 million Kgs of high quality tobaccos annually.

Tobacco is produced in Andaman and Nicobar Islands, Dadra and Nagar

Haveli, Delhi, Pondicherry etc.

Tobacco is harvested in the following steps:-

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GOLD FLAKE

Tobacco is a crop that can be grown in a wide range of soils and climatic

conditions. Tobacco is also the only crop that thrives on low fertility land

and is usually grown in rotation with other food crops and it needs cold

climate.

Tobacco seeds are miniscule and cannot be sown directly in the field.

Seedlings are first produced in plant beds or green houses and then

transported after seven weeks by hand or planting machines into the

fields.

These plants are then fertilized according to the type and soil conditions.

The tobacco plant is susceptible to many diseases and therefore, great

care is taken to protect these plants.

The tobacco plant generally takes around 5 months from the germination

stage to harvest. In some countries such as Malaysia for example, there

are 3 crop harvests in a year.

The three types of tobacco typically grown, Virginia, Oriental and Burley

have varying stages of ripeness. Some of the tobacco leaves are harvested

by hand while other plants are cut off at the stalk, taking the entire plant.

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GOLD FLAKE

2)

Tobacco Curing :

Immediately after harvesting, tobacco is cured to remove all of the natural

sap from the leaves so that it can be further processed and manufactured.

There are three primary methods of curing cigarette tobaccos, air curing,

flue curing and sun curing, but all curing focuses on regulating the rate at

which moisture is removed from the tobacco.

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GOLD FLAKE

The three stages of curing: Coloring: The continuation of natural ripening

process. Lamina drying: The leaf tissue is dried to a particular moisture

level. Stem drying: Moisture is removed from the stem.

Flue curing takes place in closed structures with ventilation and artificial

heating. Heat and humidity are controlled to remove moisture from the

leaf and this drying process fixes the characteristic orange-yellow color.

Flue curing requires four to seven days.

Air curing requires an open framework where sticks of leaves or whole

tobacco plants are hung. Leaf color changes from green to yellow to its

final brown color as leaves and stems dry slowly. This process takes

about one to two months.

Sun cured tobacco is also called oriental tobacco. These leaves are

usually dried by stringing the tobacco leaves and leaving them to dry in

the sun. Sun-cured tobaccos have characteristic aromas. This takes up to

three to four weeks.

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GOLD FLAKE

3) Tobacco grading and buying :

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GOLD FLAKE

The quality of tobacco is dependent on the curing and fermentation

processes. As a result, even within the same types of tobacco, two

different batches of tobacco are not necessarily the same.

Depending on the area, tobacco growers use two main methods of selling

tobacco - by auction or by a contract system. The former is when

merchants buy tobacco selectively and the latter is when they buy the

growers' whole crop. ITC mainly purchases tobacco in whole sale as it is

large scale manufacturer of cigarettes.

The company has also hired Just in Time (JIT) buyers for buying

qualitative tobacco for manufacturing, so that the manufacturing quality

is also maintained. The JTI buyers know exactly what they are looking

for when it comes to tobacco. They see, smell and feel the difference

between the different tobacco qualities, when they buy it from the

merchants.

Before exporting, Virginia and Burley tobaccos are threshed. This

involves separating the midrib of the leaf, resulting in fairly small pieces

of tobacco lamina suitable for cigarette production. Threshed tobaccos are

then packed to specific controlled moisture levels. For JTI, grading

parameters are stalk position, color, texture, aroma, and leaf size.

ITC also purchases tobacco from outside India especially Burley tobacco

which is used for making stronger cigarettes.

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GOLD FLAKE

4)

Primary Processing:

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GOLD FLAKE

After the tobacco is stored and aged, it goes through a final processing

phase according to blend formulas used for making various types of

cigarettes. This process includes blending, conditioning, casing, cutting,

drying and top flavoring. Once this is done, the raw material is finally

ready to be made into cigarettes.

In order to produce a characteristic, homogeneous blend of tobacco,

different types of tobacco are mixed according to precise recipes.

Moisture is then added to render it supple enough to be handled,

processed or manufactured.

Casing refers to the sauce composed of a variety of ingredients such as

sugars, humectants and aromatic substances applied to tobacco before

being cut into thin strands called cut rag.

When the tobacco has been cut it is dried and cooled to the final moisture

required before cigarette manufacture. The tobacco is then ready for the

addition of concentrated scents and aromatic essences called top flavors.

The top flavors are sprayed onto the tobacco or applied in drums. In the

manufacturing of menthol cigarettes, menthol is sprayed onto the tobacco

instead of top flavors. After this, the cut tobacco is placed in silos.

5) Cigarette Manufacturing :

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GOLD FLAKE

ITC uses industrial machines which are capable of mass-production up to

16,000 cigarettes per minute. After the tobacco has been treated and

processed, the tobacco is made into cigarettes in a machine typically

called the "Maker". They then are put through quality control checks to

ensure they meet predetermined standards before being sent to the

packing machine.

Tobacco is transferred from the silos via a pneumatic tube system into the

"Maker" machine and the tobacco is shaped into a circular form. White

cigarette paper is then fed into a machine from a roller.

The trademark logo is printed and the paper is wrapped around the bare

tobacco. The paper is then sealed with glue, creating a continuous

cigarette stick. A cutting tool slices this into double-length sticks to

which a filter is added.

The double-length sticks are cut in half and a double length filter is

placed between the two sticks. Brown cork paper is wrapped around the

filter to rejoin the two halves and sealed with glue creating two cigarettes

joined back-to-back.

Finally, an ingenious mechanism divides the double cigarette and turns

one half the other ways around. This process ensures that the cigarettes

created are facing the right direction and ready for the packing machine.

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GOLD FLAKE

6) Packaging :

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GOLD FLAKE

Cigarettes that are ready for packaging are transported by conveyer belt

to the "packer" machine where they are separated into feeder channels to

be inserted into packs. Meanwhile, aluminum from a roller as well as

cardboard is fed into another machine and template patterns of the packs

are stamped out. Groups of 10, 20 or 30 cigarettes are inserted into the

finished inner lining and then the final external packing is added.

Next comes the wrapping of each pack with a polypropylene film with

pull strings and weld. This is done to preserve the humidity of the freshly

made cigarettes - a vital factor in preserving their overall quality.

The packing process, however, does not end there. The final part is to

collect the individual packs of cigarettes into cartons of ten, which are

again wrapped by polypropylene.

For customer shipping, fifty cartons are automatically packed in

cardboard boxes. The pallet machine lifts the 15g cardboard boxes each

containing 10,000 cigarettes, directly on transport pallets.

During the cigarette manufacturing process, engineers and technicians

conduct numerous quality control checks aided by an array of monitoring

devices as well as testing and measurement systems.

30CHAPTER III

GOLD FLAKE

ATTRIBUTES OF THE PRODUCT

Gold Flake is a category brand name for the product class of cigarettes. The

Gold Flake cigarettes are composed primarily of golden tobacco, which is

distinctive feature from other cigarettes. Gold Flake cigarette is composed

primarily of golden tobacco (brightly colored tobacco), which like any other

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CHAPTER III

GOLD FLAKE

tobacco is considered injurious to health. Some other cigarettes which are

generally not very prevalent also consist of nicotine as opposed to tobacco.

However, such cigarettes are not manufactured under Gold Flake brand name or

by ITC or by any branded company.

The smoke of the cigarettes is considered so harmful that it causes diseases

even to the passive smokers, the diseases primarily of respiratory disorder

nature. Paper is used to roll the tobacco inside. Gold Flake comes in various

lengths and types. The length of a cigarette varies from 60mm to 100 mm. The

various types are filter, plain and micros.

A cigarette has may attributes and components like filter, shape, weight,

color, form material, hard, soft, internal and external parts, style, etc.

The various components and attributes of GOLD FLAKE are:-

Shape: The shape of the Gold Flake cigarette is cylindrical and is called

a stick. It has golden tobacco rolled in paper with filter on one side in

case of filtered cigarettes.

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FILTE

Holder or Accessory

Paper (form)

Tobacco Inside

GOLD FLAKE

Length: The length of a cigarette varies for different brands. There is

different tax rate charged by the government on basis of cigarette length.

High length of cigarette attract high tax rate. The Gold Flake cigarette

(Large) has the standardized length of 84mm and Small Gold Flake is

having length of 69mm.

Form: Though the tobacco is also consumed in powder form, however in

case of cigarettes it is usually smoked. The smoke carries the burnt

tobacco particles with it which act as a stimulant, satisfying the motive of

consumption for the consumer or smoker.

Cigarette Paper: The cigarette paper for Gold flake comes to the

industry wrapped on Bobbins:

a) Width: 26 - 27mm

b) Length: 5,000 - 6,000m

Weight: The tobacco is the main component of weight in the cigarette.

GOLD FLAKE is of different sizes 84mm and 69mm where the tobacco

content is different which matters the weight of the cigarette as well as

the size and price.

Color: The paper used is generally white in color. However, the

whiteness of the paper varies. The filter comes in two colors that is

golden and white.

Price: The price of large packet of Gold Flake is Rs 34/- containing 10

cigarettes, small packet is Rs 28/- and loose cigarette is Rs3.50/-

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GOLD FLAKE

Filter: It is a type of material which is used in every cigarette to reduced

irritation, cough, bad breath, excessive phlegm, and smoke by-product on

teeth, fewer symptoms of shortness of breath, tightened chest, and heart

discomfort. Filter is safe, hygienic, and easy to carry. The specifications

of the filter used in GOLD FLAKE cigarettes are:

• Diameter: 5-7 mm.

• Length: 13-16mm.

• Weight: 1g.

• Filter material: high-quality nontoxic plastic and inner core wood fiber

• Package material: high-quality nontoxic plastic sheets and aluminum

foil.

• UV sterilized.

External parts: As such there is no external part, however, few people

like to smoke with an additional pipe attached to it which also acts as a

filter.

Style: The inherent word cigarette itself reflects style in some of the

consumer minds. Gold flake is primarily associated with a state of

richness. Most cigarettes give a perception of confidence to the user.

Benefits of the Product

People smoke cigarettes for many reasons as it helps in losing weight,

release from stress, if anyone has a stuffy nose, and smoking will help the

respiratory tract unobstructed. It also aids in relaxation and reducing boredom.

Smoking a filter cigarette causes lesser harm to health than non filter cigarettes.

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GOLD FLAKE

The benefits of the product have been divided into two categories.

Primary Benefits. Secondary Benefits.

Superior quality.

Consistent quality.

Smoothness.

Mildness.

Refreshing.

Less Tar level.

Improves concentration.

Reduces stress.

Helps lose weight.

Helps to relax and reduce

boredom.

Helps to socialize.

Acts as appetite suppressant.

A companion when lonely.

Private indulgence for women.

Packaging of the Product

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GOLD FLAKE

Gold Flake cigarettes come in packs containing 10 to 20 cigarettes. The

packets are constructed from hard paper, with a water resistant glossy finish on

the outside. The shape is polygonal (similar to packs of many other cigarette

brands) with rectangular faces. The pack can be opened from the top via a paper

lid. The lid is linked and joined for proper rotation.

The body of the packet is chrome yellow with a gold band separating the red

colored lid. The logo is bordered with gold and displayed on both the front and

back faces of the body as well as on the upper portion of the lid. The front face

is depicted in the image above. The front and back faces have a slightly ribbed

texture around the logo. “FILTER TIPPED” along with an 8 pointed star is

written in gold on both sides of the lid. On one side of the lid, the no. of

cigarettes inside is written in gold. On the other side of the lid “NOT FOR

SALE TO MINORS” is written. The statutory warning is given at the base of

the front face. The no. of cigarettes, price and packaging is displayed at the

bottom of the packet. All the written information is in a Sans Serif style font.

Each single cigarette is white in color with an ochre colored bottom portion

(with yellow flakes). W.D. & H.O. Wills is inscribed both on the packet and on

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GOLD FLAKE

each cigarette in a stylized font. The length of the cigarette in is around 69mm

for a pack size of 10.

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