Rothmans India joint venture falls through

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NEW DELHI -- British tobacco marketer Rothmans of Pall Mall, whose Rothmans cigarette is the only foreign brand to be made in India, has called off a proposed 50:50 joint venture with New Delhi-based GTC Industries.

Rothmans blames incompatible business philosophies of the two cigarette marketers. And as a result, Rothmans will not renew GTC's one-year license to make the premium cigarette in India.

This is the second setback for Rothmans since it split with its partner of 11 years, Godfrey Phillips (India), in April last year. Rothmans will now have to reassess its plans for India, especially with the planned onslaught by brands like Marlboro, State Express 555, Benson & Hedges and Kent from tobacco giants like R.J.Reynolds Co., B.A.T Industries and Philip Morris Cos.

The upmarket positioning of Rothmans meant low-volume sales, which caused concern to GTC as well as Godfrey Phillips, the Bombay-based cigarette company owned 36% by Philip Morris Cos. Also, the brand had to compete with foreign products smuggled from overseas.

Calcutta-based ITC Ltd., owned 31.7% by B.A.T, is India's largest tobacco marketer, with Wills its flagship brand. ITC and B.A.T are in negotiations for an equal joint venture to launch international cigarette brands in India.

Copyright September 1996, Crain Communications Inc.

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