COIMBATORE: The recent ban on gutkha by Gujarat
and Delhi is likely to increase the demand for cigarettes. With the
ban, the number of states restricting the sale of gutkha has reached
11.These states account for about 45% of the cigarette consumption in
the country, analysts tracking the sector said.
The Gujarat and Delhi state governments have banned gutkha from September 11 following a notification from the Food Safety Standards Authority of India. The notification bans all food products with tobacco or nicotine. Other states that have done so in the past are Madhya Pradesh, Kerala, Bihar, Maharashtra, Rajasthan, Haryana, Jharkhand, Punjab and Chandigarh. However, there is no restriction on sale of loose tobacco or smoking tobacco products in these states.
"We see this as a positive for cigarette companies considering the hike in excise and VAT rates in recent central and state budgets on bidi and gutkha," analysts at brokerage firm Anand Rathi said. Cigarette accounts for only about 15% of the tobacco consumption in the country, they said.
While smokeless tobacco makes up nearly 50% of the tobacco consumption in the country, bidis account for 35% of the consumption. Though loose tobacco and cigarettes are consumed by different types of people, the ban would be a positive for cigarette companies, analysts said. " We expect low-end (cigarette) brands to benefit. Also, we estimate the new cigarette of 64-mm to command higher volumes, finding favour with former gutkha consumers."
The Gujarat and Delhi state governments have banned gutkha from September 11 following a notification from the Food Safety Standards Authority of India. The notification bans all food products with tobacco or nicotine. Other states that have done so in the past are Madhya Pradesh, Kerala, Bihar, Maharashtra, Rajasthan, Haryana, Jharkhand, Punjab and Chandigarh. However, there is no restriction on sale of loose tobacco or smoking tobacco products in these states.
"We see this as a positive for cigarette companies considering the hike in excise and VAT rates in recent central and state budgets on bidi and gutkha," analysts at brokerage firm Anand Rathi said. Cigarette accounts for only about 15% of the tobacco consumption in the country, they said.
While smokeless tobacco makes up nearly 50% of the tobacco consumption in the country, bidis account for 35% of the consumption. Though loose tobacco and cigarettes are consumed by different types of people, the ban would be a positive for cigarette companies, analysts said. " We expect low-end (cigarette) brands to benefit. Also, we estimate the new cigarette of 64-mm to command higher volumes, finding favour with former gutkha consumers."
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