How ITC’s Core FMCG and Tobacco Segments Weathered Inflation in FY25

In FY25, ITC’s core segments—FMCG (non-cigarette) and tobacco—faced a challenging economic environment marked by persistent input cost inflation, especially in essential commodities. Despite these pressures, the company managed to deliver a resilient performance, supported by strategic pricing, supply chain efficiencies, and premiumisation of its product portfolio. The cigarette segment, in particular, continued to provide a steady foundation for ITC’s overall financial health, generating stable revenue and strong margins.

The cigarette business reported revenue of approximately ₹9,228 crore in Q4 FY25, with segment profits remaining robust at over ₹5,400 crore. Volume growth was supported by stable taxation and continued recovery in out-of-home consumption. ITC’s deep market penetration and strong distribution network enabled it to maintain its leadership position, even as affordability remained a concern for consumers. The company also rolled out premium variants to tap into the growing demand for higher-end offerings, which helped protect margins amid rising costs.

In contrast, the FMCG (non-cigarette) segment encountered more direct pressure from inflation in input materials such as wheat, milk, edible oils, cocoa, and packaging materials. Revenues for this segment grew by around 4 percent to ₹5,503 crore in Q4, but margins were compressed as ITC chose to absorb part of the cost increase to protect market share in key categories like biscuits, noodles, dairy, and personal care. The company focused on cost rationalization, scaling up in-house manufacturing, and expanding its value-added product portfolio to offset margin pressures.

Overall, ITC’s diversified approach within FMCG and the strength of its tobacco business helped it navigate the inflationary climate better than many of its peers. The management emphasized agility in operations and continued investment in innovation, digital tools, and brand building. While the near-term environment remains uncertain due to commodity price fluctuations, ITC’s mix of high-margin tobacco and growing FMCG categories positions it well to handle volatility and sustain long-term growth. Sources:TheEconomicTimes