ITC reworks cigarette portfolio as tobacco taxes rise to about 70%

ITC is recalibrating cigarette pricing, pack architecture and SKU launches to manage a sharp tax increase, while continuing to build its non-cigarette FMCG, agri and packaging businesses. Its FMCG revenue has grown from about ₹10,000 crore in 2017 to ₹24,000 crore.

— Source publishedThu, 23 Jul, 2026, 21:04 IST·First seen Thu, 23 Jul, 2026, 21:14 IST·Source The Hindu BusinessLine

What happened

ITC is recalibrating cigarette pricing, portfolio architecture and new SKUs after tobacco taxes rose to about 70%. The conglomerate is also accelerating

Key facts

  • Cigarette taxes increased to around 70%
  • 115th AGM
  • Non-cigarette profit share rose from 17-18% in 2017 to 25% before the 2025 hotels demerger
  • ITC bottom line rose from ₹10,000 crore to ₹20,000 crore
  • Non-cigarette FMCG revenue rose from about ₹10,000 crore in 2017 to ₹24,000 crore

Why this matters

ITC’s accelerated diversification strengthens the case for acquisitions or partnerships in scalable FMCG adjacencies, distribution capabilities and packaging assets that reduce tobacco dependence.

What to watch

  • Further GST, excise or compensation-cess changes affecting cigarette retail prices.
  • Sequential cigarette volume growth, price/mix realization and EBIT margin commentary.
  • Changes in legal-cigarette market share versus illicit or unorganized tobacco indicators.
  • Launches or discontinuations of small-pack, value-tier and premium cigarette SKUs.
  • FMCG revenue growth, EBITDA-margin trajectory and share of total operating profit.
  • Government enforcement actions, seizures and policy statements on illicit tobacco trade.
  • Reconfigure pack-price ladders, including low-outlay packs and premium formats, to manage consumer downtrading.
  • Prioritize high-margin cigarette SKUs and reduce complexity in underperforming variants.
  • Increase anti-illicit-trade advocacy, emphasizing tax stability and enforcement against illegal cigarettes.
  • Use cigarette cash generation to fund targeted FMCG launches, distribution expansion and premium food categories.
  • Lean further into integrated agri sourcing and packaging capabilities to lower FMCG input and supply-chain costs.