According to Indian media Economic Times, Indian comprehensive enterprise ITC said it has discovered another potential market worth US$500 million in the tobacco industry, this time in the export of high-end nicotine and its derivatives market.
Yelis analyst Vivek Maheshwari said that the nicotine market is currently worth US$500 million and the gap between supply and demand is expected to reach 50% in the next few years.
On Tuesday, ITC management said at an investor conference with analysts that it has positioned nicotine as a new growth driver in the agriculture business. High-end nicotine is receiving increasing attention due to the growth in global demand for smoking and tobacco pouches.
Indian tobacco stands out because it contains high amounts of nicotine. Maheshwari explains, “This product has high profit margins as the processing is complex and the barriers to entry are high. ITC has implemented a farm-to-bottle/bag model here through strong procurement capabilities. It can also offer Full traceability that customers value.”
Due to the special processing technology of nicotine, business profit margins are above 50%, which also includes the increasing global preference for ESG-compliant supply chains in high-end nicotine products. ITC intends to leverage the institutional capabilities of its tobacco leaf business and intends to manufacture the purest nicotine in compliance with the strict standards of the United States and Europe.
Sharekhan said: "This is a high-profit business, with a capital contribution of 50%, which can provide strong profit support for ITC's agricultural business."
