RICHMOND, Va. — Altria Group Inc. is raising its cigarette prices 14 cents a pack, Goldman Sachs reported.
The increase applies to Marlboro, Chesterfield and L&M. There is also a 17-cent-per-pack increase on Basic, Benson and Hedges, Benson and Hedges Menthol Green, Merit, Nat’s, Parliament and Virginia Slims.
The increases took effect on Aug. 15, according to New York-based Goldman Sachs’ Managing Director Bonnie Herzog. Altria’s last cigarette increase was in January.
Herzog also noted that Altria, Richmond, Va., is implementing a manufacturer supported off-invoice promotion for all Marlboro SKUs in select states, suggesting that Altria is continuing to focus on protecting its Marlboro brand franchise to limit downtrading pressure and maintain share stability.
“Importantly, we believe [Altria] has become more sophisticated and targeted with its pricing strategies and in some cases has been pulling back on promotional spending as a way to strengthen its net price realization,” Herzog said.
Overall, Goldman Sachs views the announcement as positive; however, the price increase does little to address its ongoing concerns related to potential headwinds, including the likelihood for greater excise tax increases and stepped-up regulation, difficult comparisons to lap this year, potential cigarette consumer downtrading and Altria’s need for stepped-up investment spend to pivot its portfolio to a noncombustible future, Herzog said.
British American Tobacco also recently increased cigarette prices in July.