British American Tobacco (BAT) is raising its cigarette pack prices again marking the third increase for the year, according to a research note from Goldman Sachs Managing Director Bonnie Herzog. The increase will go into effect on Jan. 1, following the London-based tobacco company’s price increase in September.
“The timing of the increase appears to return to BAT’s more typical quarterly cadence of price increases but also likely addresses continued cigarette volume pressures,” Herzog said.
BAT is taking a cigarette list price increase of 15 cents per pack on Newport, select Camel brands, and all styles of Natural American Spirit as well as Pall Mall Box. It’s also taking a 25-cent increase on 12 SKUs of Camel, but didn’t raise the list price of Lucky Strike and Pall Mall Select, Herzog said.
Other increases across its portfolio include a 10-cent-per-pouch and 40-cent-per tin hike on Natural American Spirit roll-your-own (RYO).
“Looking ahead, we continue to expect strong net price realization as the industry continues to successfully implement price increases to offset ongoing volume pressures,” Herzog said. “While there continues to be increased risk of potential downtrading and concerns that manufacturers have less pricing power today…we believe brands like Marlboro with a very loyal customer base and strong/effective promotions should be able to keep those consumers within the franchise.”
Altria and its subsidiary Philip Morris USA announced its third cigarette list price increase of the year in July.
British American Tobacco owns Winston-Salem, North Carolina-based Reynolds American Inc., the parent company of R.J. Reynolds Tobacco Co.
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