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Informist, Tuesday, Sept. 8, 2026

 

--Distributors: Cigarette cos increasing focus on sales via quick commerce

--Distributors: Cigarette cos started selling budget brands on quick commerce

--Distributors: Cut in quick commerce convenience fee driving cigarette sales

--Distributors: ITC widening availability of cigarette brands to boost sales

 

By Avishek Rakshit

 

KOLKATA – Six months after the government sharply raised taxes on cigarettes, which resulted in substantial price hikes and a fall in sales, manufacturers such as ITC Ltd., Godfrey Phillips India Ltd., and VST Industries Ltd. are increasingly focussing on stepping up sales via quick commerce platforms to at least partially reverse the decline in volumes.

 

Cigarette sales from quick commerce platforms started increasing around two months ago after the platforms lowered or discontinued the convenience fee they charged on cigarette sales, an official with a quick commerce platform told Informist. Convenience fees, which hovered around INR 30 per delivery, dropped to INR 15 per delivery on some platforms while others, which charged convenience fees per pack, did away with the charge altogether.

 

The reduction or lowering of the convenience fee is primarily on account of the change in procurement. Some quick commerce platforms, which are aggregators, take orders from consumers and supply cigarettes directly after procuring them from sub-distributors and wholesalers who sell them at lower prices as compared to retailers. This assures optimal margins for the aggregators.

 

On the other hand, quick commerce companies that maintain inventory themselves procure cigarettes from wholesalers and resellers who sell at prices higher than sub-distributors but lower than retail prices. The margin from such sales is lower when compared to the margin made by aggregators, because of which a convenience fee is usually charged.

 

Retailers told Informist that cigarette distribution in the country involves several layers. Manufacturers primarily sell to distributors, who then sell to sub-distributors. These sub-distributors sell to wholesalers who in turn sell to resellers. The latter sell to retailers. Consumers buy cigarettes primarily from retailers. At every step of the network, margins get squeezed and hence bulk sellers try to procure cigarettes directly from distributors or sub-distributors.

 

Informist learnt that quick commerce companies had to previously procure stocks primarily from resellers, which has now changed to a mix of sub-distributors, wholesalers, and resellers. Hence, some quick commerce companies are able to discount the convenience fee entirely while others charge a reduced fee.

 

Spotting the trend of rising cigarette sales from quick commerce platforms, ITC and Godfrey Phillips have stepped up their presence on online platforms and made more brands available there. Before the government raised taxes on cigarettes, these two companies only offered premium and high-end variants online.

 

However, after the new tax regime kicked in, it is learnt that both companies have also made budget and mid-priced cigarettes such as Flake, Gold Flake Super Star, Silk Cut, and others available on quick commerce channels.

 

At the same time, the higher-end premium assortment is also being reworked. For instance, ITC's Classic Low Smell and Classic Alphatech variants, which are available in physical stores in a limited manner, are now widely available online despite the mother brand, Classic, not being an "online first" brand. Online first refers to those products that are launched online before being introduced in physical stores. These products continue to depend on online channels for most of their sales.

 

ITC's top-tier brands such as Classic Blue Leaf and Wills Insignia, priced at INR 500 for a pack of 20, which are also not widely available in physical stores, are also now easily available on quick commerce channels.

 

"At the same time, companies are introducing brands across regions," one of ITC's distributors in Kolkata said. "American Club (an ITC brand), priced at INR 360 for a 20-stick pack, had limited availability in Kolkata in some pockets but is now being distributed evenly. But this brand is mostly focused on online sales. Similarly, the original Wills Navy Cut, priced at INR 140 for a 10-stick pack, was so long exclusively available in West Bengal and some parts of east India; it is now introduced to other states, particularly in west India as well."

 

Sales from quick commerce platforms not only increase sales volume growth, but also aids revenue growth. Higher priced packs sell the most on quick commerce platforms. At the same time, while consumers mostly buy single sticks from corner stores, online platforms only deliver whole packs comprising 10, 16, or 20 sticks according to the brand and packaging.

 

Although none of the three cigarette companies gives any break-up or quantitative indication of sales from quick commerce channels, ITC has earlier indicated that it has rolled out a channel-specific strategy to maximise sales from these platforms. The company, which enjoys 75% share in the country's cigarette market of nearly 120 billion sticks per annum, said it saw robust growth from new-age sales channels in the June quarter on the back of sharp execution of channel-specific joint business plans, collaborations, format-based assortments, and category-specific sell-out strategies.

 

Tuesday, shares of ITC ended at INR 263.50 apiece on the National Stock Exchange, unchanged from Monday's close. Shares of Godfrey Phillips ended at INR 2,010, down almost 1%, while shares of VST Industries ended only marginally lower at INR 206.74.  End

 

Edited by Rajeev Pai

 

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