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Tobacco

Altria Takes Second Price Increase for 2017

Other cigarette manufacturers expected to follow suit

UPDATE: Since the initial posting of this story, Reynolds American Inc. followed Altria Group in taking a wholesale, list-price increase of 10 cents per pack on its key cigarette brands, a move that includes its Santa Fe Natural Tobacco Co. subsidiary. These move will affect orders billed after Sept. 21, the company said. No changes were made to the current off-invoice discount values for Newport non-menthol styles.

RICHMOND, Va. -- Marlboro cigarettes will cost a little bit more in the coming weeks after Altria Group Distribution Co. raises its wholesale, list-price per pack by 10 cents across all its brands, including its iconic Marlboro line, according to an industry analyst.

Citing industry contacts, Bonnie Herzog, managing director of consumer equity research for Wells Fargo Securities LLC, New York, reported that Richmond, Va.-based Altria will execute the 2% to 3% increase per pack and $1-per-carton increase effective with shipments on or after Sept. 24. The timing, Herzog said, is “in line” with its typical practice of raising cigarette prices every six months. The last increase was in March, ahead of California’s $2-per-pack cigarette tax going into effect.

Herzog said she expected the price increase to offset “somewhat softer than expected Marlboro share performance" reflected in recent sales statistics from New York-based data provider Nielsen.

Other major cigarette manufacturers are expected to follow suit with similar price increases. Herzog said she expects Winston-Salem, N.C.-based Reynolds American Inc. and Greensboro, N.C.-based ITG Brands to announce an “increase in prices in the next few days, but possibly not as robust of an increase.”

Also, Altria subsidiary U.S. Smokeless Tobacco Co. (USSTC) is taking a list-price increase of 7-cents per can (about a 2% to 3% increase) across its core USSTC products, including Copenhagen, Skoal and Red Seal brands. USSTC also announced a 12-cent-per-can list-price increase on the value end of its smokeless platform, further shaving the gap between premium and value brands, Herzog said.

Meanwhile, Reynolds announced a reduction of its state-specific off-invoice (SSOI) pricing on Newport Menthol styles sold in Massachusetts from $5 per carton to $4.50. The reduction will be effective on Oct. 30, according to Herzog.

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