Reynolds Raises MST Pricing

UBS predicts other MST players will follow suit

Melissa Vonder Haar, Freelance Writer

WINSTON-SALEM, N.C. -- On May 7, Reynolds American Inc. announced it would be increasing prices on all its moist smokeless tobacco (MST) products, which include Grizzly, Kodiak, Cougar, Hawken and Camel Snus, by five cents per can. The new pricing will go into effect on all new orders starting May 8.

Although Reynolds would not comment specifically on pricing, company spokesperson Richard Smith told CSP Daily News, "I can confirm that, beginning May 8, 2013, a list price increase of five cents per can on all MST products and five cents per tin on all styles of Camel Snus is in effect. I cannot speculate how this will affect the price at retail as we don't set that price."

Although Reynolds is the first major MST manufacturer to raise prices in 2013, Nik Modi, analyst with UBS Securities LLC, New York, predicted they will not be the last.

"With Reynolds American's move, we expect other MST players like Altria and Swedish Match to follow with similar price increases of their own," he wrote in a May 8 report, "Reynolds Takes Pricing in MST."

Modi also noted that he expects Richmond, Va.-based Altria Group's Phlip Morris USA, Winston-Salem, N.C.-based Reynolds and Greensboro, N.C.-based Lorillard Tobacco Co. to announce cigarette price increases of approximately six cents per pack in late May or early June, resulting in the realization of a 4% pricing for 2013.