At a time when cigarette majors have been posting muted growth owing to tepid consumer demand, Godfrey Philips recorded a 13.1 per cent volume growth during the first three quarters of the current fiscal, increasing its market share by one per cent.
In its earnings presentation following the third quarter results, the company’s CEO, Bhisham Wadhera, said, “Godfrey Phillips delivered strong cigarette domestic volume growth of 13.1 per cent during the (first) nine months along with a better product mix and improved realisations. Our domestic cigarette market share also increased from 11.9 per cent to 12.9 per cent.”
However, Abneesh Roy, executive vice president of institutional equities at Edelweiss Securities said market leader ITC’s cigarette volume had grown 2.5-3 per cent during April-December 2019. In the country's highly polarised cigarette market, ITC commands a market share of about 75 per cent.
Besides the product mix, the growth in Godfrey Phillips cigarette sales, according to sources, is also led by new launches and its flagship Marlboro brand entering new markets.
“Marlboro has been growing faster than other brands and has also been entering new markets”, Roy said.
According to Wadhera, the company opted for geographic expansion into the high-potential markets of southern India by developing local sales and distribution infrastructure to further its core cigarettes business.
While this flagship company of the $2.8 billion-strong Modi Enterprises has a manufacturing and distribution license for Marlboro in India, it also owns brands like Four Square, Red and White, Cavanders, Tipper, North Pole and others.
In India, the king size (100 mm) Marlboro is available in various ranges like Red, Gold, Fuse Beyond, Fine touch, Marlboro Clove Mix and others.
Four Square, the firm's largest flagship brand franchise, on the other hand has a national footprint with presence in more than 19 states and comes in the mini kings size (69 mm).
During April-December 2019, in terms of revenue, Godfrey Philips posted a 20.99 per cent increase in its earnings from cigarettes and tobacco business, at Rs 2,110.29 crore, while profitability surged 44.80 per cent at Rs 479.47 crore. During this period, gross sales value of cigarettes, which includes all taxes, rose by 19.6 per cent as well.
| 9 Months ended December 31, 2019 | 9 Months ended December 31, 2018 | |
| Revenue from cigarettes, tobacco and related products | 2110.29 | 1744.15 |
| Gross profit from cigarettes, tobacco and related products | 479.47 | 331.12 |