Indian Cigarette Sales on Track to Surpass Pre-Covid Levels

Innovation
Jul.15.2022

Indian cigarette sales are set to touch 93 billion sticks this year on the back of a stable tax regime and increased mobility after the ebbing of pandemic restrictions, reports The Financial Express, citing a study by rating agency Crisil.

 

Indian Cigarette Sales on Track to Surpass Pre-Covid Levels

 

Covid-19 lockdowns caused cigarette volumes to plunge to 77 billion sticks in 2021 from 90 billion sticks in 2020. As restrictions eased, cigarette sales recovered to 88 billion sticks.

 

The higher volumes will help cigarette manufacturers cope with the rising cost of inputs, which Crisil expects to shave manufacturers’ gross margins by 100-150 basis points.

 

Indian cigarette makers use flue-cured Virginia (FCV) tobacco, which is grown mostly in Andhra Pradesh, Telangana and Karnataka. FCV prices have risen 15 percent since last year as cultivation was impacted by untimely rainfall in December 2021 and January 2022.

 

Meanwhile, prices of paper are estimated to be 10 percent higher this fiscal year on an already-elevated base from 2020. India’s recently enacted ban on single-use plastics has driven up products costs, too, as cigarette manufacturers shift to biodegradable materials.

 

Between 2013 and 2017, excise duties on cigarettes rose annually at 15.7 percent. In fiscal 2018, the industry saw a further 20 percent hike in taxes as a result of the increase in excise duty and transition to a good and services tax.

 

Despite such challenges, cigarette manufacturers appear to be in good financial shape.

 

According to Crisil Associate Director Gopikishan Dongra, tobacco companies are likely to retain around 65 percent operating margins, due to the strong competitive advantage of established manufacturers and high entry barriers such as entrenched distribution channels and restrictions on advertising.

 

The content excerpted or reproduced in this article comes from a third-party, and the copyright belongs to the original media and author. If any infringement is found, please contact us to delete it. Any entity or individual wishing to forward the information, please contact the author and refrain from forwarding directly from here.

 

Also read:

Indiana laws that go into affect this month

Germany's Strict Regulations on E-cigarettes: Multiple Shops Investigated

 

Illegal Vape Retailers in UK Could Face 12-Month Shutdowns
Illegal Vape Retailers in UK Could Face 12-Month Shutdowns
The UK government plans to expand police and trading standards powers by extending closure orders for shops selling illegal vapes and cigarettes from a maximum of six months to 12 months, in a crackdown on organised crime on high streets.
Jun.12
 NYT: Reynolds American Donated $5 Million Before FDA Vape Policy Shift
NYT: Reynolds American Donated $5 Million Before FDA Vape Policy Shift
According to The New York Times, Reynolds American donated $5 million to a Trump-backed super PAC shortly before the FDA introduced a new policy that could benefit major tobacco companies seeking to sell flavored vaping products.
News
May.21
South Korea Rejects 16 Trillion Won Tax-Evasion Claim Over Chinese Synthetic Nicotine
South Korea Rejects 16 Trillion Won Tax-Evasion Claim Over Chinese Synthetic Nicotine
The South Korean government rejected allegations that Chinese synthetic-nicotine e-liquids were linked to about 16 trillion won in tobacco tax evasion, saying China does not ban synthetic nicotine exports and the estimate is difficult to verify, while acknowledging that pre-law synthetic-nicotine inventory is effectively difficult to tax.
Market
Jun.25
UK Vaping Products Duty to Raise £565 Million by 2030/31
UK Vaping Products Duty to Raise £565 Million by 2030/31
The UK will introduce Vaping Products Duty on all vaping liquids from October 1, 2026, with government revenue forecast to rise from £135 million in 2026/27 to £565 million by 2030/31.
Jun.18
AIR Shares Drop 18.6% in Nasdaq Debut, Testing Hookah’s Move Toward Public Markets
AIR Shares Drop 18.6% in Nasdaq Debut, Testing Hookah’s Move Toward Public Markets
AIR Global’s Nasdaq debut under ticker AIIR ended with a 18.6% first-day decline, giving the global hookah industry a rare public-market reference point. Beyond one company’s share move, the listing raises a broader question: can a culturally rooted, fragmented and venue-based category evolve into a more scalable and investable consumer sector?
Special Report
May.19
U.S. Military Nicotine Policy Sparks Debate as Nicotine Pouches Enter Discussion
U.S. Military Nicotine Policy Sparks Debate as Nicotine Pouches Enter Discussion
An opinion article published by Stars and Stripes argued that the Pentagon’s January nicotine clinical guidelines overemphasize abstinence, fail to reflect the reality that about 30% of active-duty personnel use nicotine, and do not address nicotine pouches as potential harm-reduction products.
Industry Insight
Jun.08