ITC hikes cigarette prices

Market leader in cigarettes ITC has increased the price of its Wills Classic Mild brand by 10 per cent. A pack of 20 now costs Rs 65 compared with Rs 59 earlier. Company officials were unavailable for comment, but retailers confirmed the price hike.

Three months back ITC brands Wills Gold Flake and Wills Navy Cut had seen a 5-9 per cent increase in prices, following a 10 per cent hike in excise duty.

The price of Goldflake had gone up from Rs 28 to Rs 29.50, while Navy Cut was up from Rs 23 to Rs 25. Brands Classic, Capstan and Bristol however had been left untouched.

Around the same time, the K K Modi-promoted Godfrey Phillips too had effected a nominal Re 0.50 hike for its brands Red and White, North Pole and Cavenders.

It is still not clear whether Godfrey Phillips will follow ITC and hike prices, as company officials could not be reached.

Analysts say cigarettes category has seen sustained volume growth in the last six quarters and that could be a factor in the Wills Classic price increase.

Besides, the excise duty increase after the budget had not been entirely passed on to the consumer at that point, and the company may have decided to do so now.

Some analysts, however, point out that excise duty increase after the budget was offset by the Supreme Court ruling in January that state governments cannot levy luxury tax on cigarettes.

In any case, analysts say that Wills Classic being one of ITC's smaller brands, the price hike will not affect business much.

ITC has over 70 per cent share in the over 80 billion sticks Indian cigarettes market.