NEW YORK -- The big tobacco companies have taken price increases on key cigarette brands, according to reports by Bonnie Herzog, managing director for beverage, tobacco and convenience store research at Wells Fargo Securities LLC, New York, citing industry trade contacts.
Richmond, Va.-based Altria Group and its Philip Morris USA on November 12 announced a 7-cents-per-pack (approximately 2% to 3%), 70-cents-per-carton price increase on all of its core brands except L&M, which will have a 7-cents-per-pack promotional decrease, which is effectively a price increase as its off-invoice allowance is going to 8-cents-per-pack from 15 cents per pack.
This action is to be effective with shipments on or after Nov. 16, 2014.
Lorillard Inc., Greensboro, N.C., also announced a 7-cents-per-pack (approximately 2% to 3%), 70-cents-per-carton price increase on Newport, Maverick, Old Gold, Kent and True.
This pricing action will be effective with orders billed on Nov. 14, 2014.
And Winston-Salem, N.C.-based Reynolds American Inc. followed on November 13 with a 7-cents-per-pack (approximately 3%), 70-cents-per-carton price increase across its brand portfolio. Further, its Santa Fe Natural also took a 7-cents-per-pack list price increase on the Native American Spirit brands.
Reynolds American's pricing action will be effective tNov. 14, 2014.
Mebane, N.C.-based Liggett Vector Brands LLC also announced a 7-cents-per-pack cigarette list price increase.
For each of the company's increases, she wrote, "This list price increase is slightly earlier than expected based on the results from our Tobacco Talk industry trade surveys and about a week earlier relative to November 2013's cigarette list price increase. … Overall, we view this price increase as positive and believe it demonstrates the industry still has very strong pricing power--and this is coming on the heels of two quarters of very strong pricing. Given that consumption will likely continue to decline in the mid-single digit range, pricing remains a critical driver of revenue and remains necessary to drive top-line growth."
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