Mumbai: The ability to smoke out of homes after the pandemic wanes will be among the factors that will drive up cigarette sales in FY22, a rating agency said on Wednesday. Volumes are expected to grow by up to 7-9 per cent to 83-85 billion sticks in FY22, after declining over 13 per cent in FY21, Crisil said in a report. However, revenues de-grew only 5-7 per cent in FY21 as the 13 per cent excise hike was passed to the smokers.
The lockdowns during the pandemic have kept people indoors and caused a shift to working from home. The financial year 2020-21 witnessed longer lockdowns as compared to the ongoing FY22, when they were localised and limited to April and May itself. The agency said "recovery in out-of-home consumption, limited price hikes and a lower-base effect" will drive up the volume growth of cigarettes.
"Volume should end up higher this fiscal (on-year), with workplace, retail and recreation mobility already improving to 63 per cent of the pre-pandemic level in April-July versus 44 per cent in the same period last fiscal," its Senior Director Gautam Shahi said. However, the surge in volumes will not be sufficient to lift the volumes back to the pre-pandemic levels of 90 billion sticks a year seen in FY20, the agency said, attributing it to the second wave of the pandemic.
The hotel, restaurant, café and workplace segments, which drive out-of-home consumption, are unlikely to recover to pre-pandemic levels in current fiscal, it said. The Rs 25,000-crore organised domestic cigarette sector comprises premium king-sized (84 mm and longer) and regular (69 mm) and mini (64 mm and below) segments.
