RICHMOND, Va. -- Philip Morris USA said it is raising prices on all its cigarette brands by 10 cents per pack, effective December 18, a move that had been expected by analysts, reported Reuters.
The price increase was accomplished by lowering promotional discounts the company offers retailers on its Marlboro, Virginia Slims, Parliament and Basic brands. The unit of Altria Group Inc. also raised the list price on its other brands, a Philip Morris USA spokesperson said.
Citigroup analyst Bonnie Herzog said in a research note: Although [image-nocss] we believe this 10-cents-per-pack price increase is positive, six cents per pack will be needed to offset the higher MSA [Master Settlement Agreement] payments in 2007; however, overall, we believe this proves there is still some pricing power left for the industry, which is key. We expect the other manufacturers will follow PM's lead.
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Richmond, Va.-based PM USA plans to introduce a new menthol cigarette aimed at gaining market share in the growing category, reported the The Richmond Times-Dispatch.
The company plans to start selling Marlboro Smooth in March, spokesperson Bill Phelps told the newspaper. It will be available nationwide.
Herzog said the new Marlborowhat the company calls a line extensionis being positioned to compete with the nation's best-selling menthol cigarette, Newport, which is made by Greensboro, N.C.-based Lorillard Tobacco Co. Marlboro is the best-selling cigarette brand overall.
Marlboro Smooth has its own flavor and will not replace Marlboro Menthol, Phelps said. Marlboro Mentholhas been growing, so we believe that the menthol category growth, combined with Marlboro Menthol's momentum, creates an opportunity to gain market share and grow within that category.
Herzog wrote in a research note that she expects the brand to be introduced at a lower price during the first few months of sales and then be aggressively discounted.
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