India Kings pack of 20 smokes will now cost Rs 250: ITC just upped cigarette prices

India’s largest cigarette maker ITC has raised cigarette prices on an average of 15 percent across brands after the government proposed a a sharp rise in excise duty on tobacco products in the budget 2015-16.

Finance minister Arun Jaitley proposed an excise duty hike of 25 percent on cigarettes up to 65mm in length and 15 percent on cigarettes over 65mm. This is the fourth consecutive year of steep increase in excise duty.

According to an Economic Times report, the most affordable segment of sub-65 mm cigarettes will see the maximum price increase of 16-21 percent while prices of regular, long and king size cigarettes are being increased by 13-15 percent.

So a regular pack of 20 Classics which currently cost Rs 180, will cost Rs 218.

A loose cigarette costing Rs 10 will now cost Rs 11-12.

A 20-cigarette pack of ITC Classic, which was earlier priced at Rs 190 will cost Rs 218. Goldflake Kings ( pack of 10) will now cost Rs 109 from Rs 95 earlier but a pack of 20 will cost Rs 250 from  Rs220 while Navy Cut which was priced at Rs 69 earlier, it will cost Rs 78 now.

The price of Insignia which is the most expensive ITC cigarette brand is being raised by 20 percent, and a pack of 20 will cost Rs 300.

The Indian cigarette market recorded revenue CAGR of 11% in FY02-13. ITC is the market leader with a 78 percent market share. Competitors include Godfrey Philips (9 percent), VST (8 percent) and Philip Morris (3 percent). ITC has the largest white cigarette market share in India, which makes up just 12 percent of total tobacco volume contribution.

“Cigarette demand will be driven by rising incomes, an affinity for western-style consumption, trading up from other forms of tobacco and changes in social attitudes to cigarette consumption,” said UBS in a note.

Brokerages Edelweiss and Axis Capital expect ITC’s cigarette sales by volume to plunge by 8 percent in fiscal 2016 due to the price hike.