ITC to up cigarette prices by up to 13%; new packs in stores this week

NEWDELHI: ITC Ltd, India’s largest cigarette maker, is set to increase prices of its leading cigarette brands, India Kings, Classic and Gold Flake, by 11-13%. Packs with the new price tags will hit retail stores this week, according to retailers.

The increase in cigarette prices was expected as the Union Budget on February 1 had proposed hiking the excise duty on cigarettes between 2.5% and 6%. ITC is passing on the increased duty to consumers.

A pack of 10 king-size sticks (length: 84 mm) of India Kings will now cost ₹150, up 11% from ₹135 earlier, while similar packs of Classic and Gold Flake Kings, ITC’s two top-selling brands, will cost ₹139, up 13% from ₹123 earlier. ITC has also decided to hike prices of Insignia cigarettes by 10%. A pack of 10 sticks of Insignia will now cost ₹165, up from ₹150.

“Prices of few select brands have been revised,” said an ITC spokesperson.

Post-budget, equity analysts have estimated a 5% rise in ITC’s cigarette volumes. The estimate was revised from 3% (pre-budget) as the excise hike at 6% — lowest in the past six years — was below the expected 8-10%. “Cigarette volumes in FY18 are likely to see second year of growth after being down by 15% between FY10-16,” said Abneesh Roy, an analyst with Edelweiss Securities Ltd.

ITC had, before the budget, increased prices by around 14% for cigarettes of 69mm and 74mm lengths, including top-selling brands Navy Cut and Gold Flake (regular). No more price hikes are expected for cigarettes of 69-74mm lengths soon.

Roy of Edelweiss also said that ITC can ‘easily’ increase the price of 69-74mm cigarettes by another 4% to counter the 6% excise hike proposed in the budget this year.

Last year, ITC had increased cigarette prices by 12.8% after the budget proposed to increase excise duty by 10-15%.