How many companies can one cigarette company become? Ask ITC
The post How many companies can one cigarette company become? Ask ITC appeared first on The Ken .
ITC, a cigarette company, has long sought to diversify beyond its most profitable business. Cigarette taxes in India were recently increased by 20-55%, which could potentially drive smokers towards illegal, untaxed cigarettes. This tax hike led to a 28% drop in ITC's share price so far in 2026, compared to a 16% decline in the Nifty FMCG index.
The decline in cigarette demand is partly attributed to growing awareness of the health risks associated with smoking. Wholesalers in Gwalior market used to purchase household items like Lifebuoy and Lux soaps on credit from HUL and sell them at a loss to stock up on ITC cigarettes. This annual practice, driven by the near certainty of a tax increase, demonstrated the dominance of ITC's cigarette business.
The company began its diversification efforts in the 1970s following the confirmation of smoking's link to lung cancer by the UK's Royal College of Physicians and the US Surgeon General. This led to mandatory warning labels on cigarette packaging in the US and India, which further impacted ITC's business. Over the years, ITC has expanded into hotels, agricultural commodities, FMCG, and IT.
Written by urgent.news from The Ken's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
