Godfrey Philips ups market share on higher volumes amid tepid demand

Despite market burn, tobacco major posts 13.1% volume growth

At a time when tobacco majors have been posting muted growth due to tepid consumer demand, Godfrey Philips posted 13.1 per cent volume growth during the first three quarters of the current financial year. This has led to a market share gain of 1 per cent. 
 

In its earnings presentation after the third quarter results, the company’s Chief Executive Officer Bhisham Wadhera said, “Godfrey Phillips delivered strong cigarette domestic volume growth of 13.1 per cent during the 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 is of the view that market leader ITC’s cigarette volume had registered 2.5-3 per cent growth during April-December 2019. In the highly polarised tobacco market in the country, ITC commands three-fourth market share.

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. It has also been entering new markets,” said Roy.

According to Wadhera, the company opted for geographic expansion into high potential markets of South India by developing local sales and distribution infrastructure to further its core cigarette business.

While this flagship company of the $2.8-billion strong Modi Enterprises has a manufacturing and distribution licence for Marlboro in India, it also owns brands like Four Square, Red and White, Cavanders, Tipper, North Pole and others.

In India, the kingsize (100 mm) Marlboro is available in various ranges like Red, Gold, Fuse Beyond, Fine Touch, Marlboro Clove Mix and others.

Four Square, the largest flagship brand franchise of Godfrey Phillips, on the other hand, has a national footprint, with presence in more than 19 states and comes in kingsize mini (69 mm).

During April-December 2019, in terms of revenue, it posted 20.99 per cent increase in its earnings from cigarettes and tobacco 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 include all taxes, increased by 19.6 per cent as well.