Distributors say ITC ups prices of some cigarette brands by 5-10%

[K.Karthik Raja]

Distributors say ITC ups prices of some cigarette brands by 5-10%
Wednesday, May 28

MUMBAI - ITC Ltd, India's largest cigarette maker in volume terms,
has
hiked the maximum retail prices of select cigarette brands by 5-10%,
and
plans to increase the prices of other brands also by an unspecified
amount
from Sunday, distributors and wholesalers told NewsWire18 today.
The company, which commands over 80% market share in the filter
cigarette segment, has hiked the prices of Classic brand by 8 rupees
to 88
rupees for a pack of 20 cigarettes, and of Gold Flakes Kings' pack of
10
cigarettes by 2 rupees to 40 rupees.
The ITC stock, which was nearly 5% up earlier in the day, gained
another
0.5% on National Stock Exchange after news of the price hike.
At 2:50PM, the stock was traded 5.5% up at 220.65 rupees. Total
traded
volume was 8.38 mln shares.
ITC is planning the price hike of Berkeley Filters, Wills Flake
Filters and
a few other brands too, distributors and analysts said.
The company has so far not confirmed the price hike, and did not
respond
to a query on the issue.
A Pune-based wholesaler confirmed that he had already received the
supply
of new packs of Classic, which have been made available at retailers'
shops.
However, the new packets of Gold Flake Kings cigarettes will be
available
in the next 2-3 days, he said.
According to analysts, Gold Flake Kings and Classic franchise
together
account for 10% of ITC's cigarette volume.
"If true, the price hike represents a 6% average increase on this
portfolio, and 1% of total cigarettes portfolio," said Anand Mour,
senior
analyst, Prabhudas Lilladher Securities.
Mour does not expect ITC's cigarette sales to be impacted by the
price
hike, as it "was expected", he said.
According to analysts, ITC was expected to go for a price hike in
its
cigarettes portfolio, after it stopped production of non-filter
cigarettes.
In March, the company had said it was reviewing its strategy for
non-filter cigarettes, as the sharp increase in excise duty for the
segment
had rendered the business "virtually unsustainable."
The company has already stopped production of non-filter
cigarettes.
According to analysts, the company would have to raise prices in
the
filter segment to offset the impact of revenue loss due to absence of
non-filter cigarette sales.
Non-filter cigarettes accounted for 18-20% of ITC's topline and
added 6% to its profitability. End
.