Altria and Philip Morris USA have announced a cigarette pack price increase of 15 cents, Bonnie Herzog, managing director at Goldman Sachs, announced on Jan. 18. The change is effective on Sunday and affects Marlboro, Basic, Chesterfield, L&M and L&M Simple Tobacco cigarettes.
There is also a 20-cent-per-pack increase on Benson & Hedges, Merit, Nat’s, Parliament and Virginia Slims, she said. This follows Altria’s last price increase in October, and British American Tobacco’s price increase in December.
“Broadly, [Altria’s] price increase today doesn’t come as a surprise, and we believe [Altria] has become more sophisticated and targeted with its pricing strategies as well as promotional spending to offset these more frequent list price increases, especially for price sensitive consumers,” Herzog said.
While there is some increased risk of downtrading, especially given pressures on the consumer, she said brands like Marlboro with a very loyal customer base and strong promotions should be able to keep those consumers within the franchise.
Altria, Richmond, Virginia, is one of the country’s largest tobacco producers. Its companies include Philip Morris USA, U.S. Smokeless Tobacco Co., John Middleton, Ste. Michelle Wine Estates and Philip Morris Capital Corp.
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