Tobacco

BAT Takes Cigarette List Price Increase

New prices to take effect July 3
British American Tobacco
Photograph: Shutterstock

British American Tobacco has announced a cigarette list price increase set to take effect with orders and deliveries on or after July 3.

This follows Altria’s 15-cent-per-pack increase effective April 23. BAT’s last price increase was announced in December, ranging from 15- to 38-cents per pack across several brands and effective on Jan. 2, according to Goldman Sachs, New York.

While the timing of the latest increase from BAT, which owns Winston-Salem, North Carolina-based Reynolds American Inc., the parent company of R.J. Reynolds Tobacco Co., is later than expected, Goldman Sachs Managing Director Bonnie Herzog said the magnitude of the price increases, especially on smaller brands, came in a little higher than expected.

BAT, London, is taking a cigarette list price increase of 16- to 26-cents per pack on Newport cigarettes, a 16- to 40-cent-per-pack increase on Camel and a 12-cent-per-pack increase on Lucky Strike. BAT took several other price increases across its brands but didn’t raise the list price of Pall Mall Box and Pall Mall Select, she said.

Separately, BAT announced a 16-cent-per-pack increase on most styles of Natural American Spirit and a 10-cent-per-pouch increase and 40-cent-per-tin increase on Natural American Spirit roll-your-own (RYO), Herzog said.

“Looking ahead, we continue to expect strong net price realization as the industry continues to successfully implement price increases to offset ongoing vol pressures,” she said.

While there is increased risk of consumers trading down to cheaper brands, brands with a very loyal customer base and strong and effective promotions should be able to keep consumers within the franchise, Herzog said.

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