NEW YORK -- Philip Morris USA may announce a price increase of 10 cents per pack, leading other cigarette makers to follow suit, Citigroup Analyst Bonnie Herzog wrote in a research note Thursday.
She also said Altria may soon introduce a new brand that extends either the Marlboro or Parliament lines.
According to the Associated Press, Herzog predicted the domestic unit of New York City-based Altria Group Inc. could announce the price increase immediately, with the higher prices to go into effect before Christmas.
She based her prediction on the fact that PM USA and Lorillard recently cut wholesale orders to reduce the amount of inventory wholesalers can buy, a move she called typical right ahead of a price increase.
We believe the industry still has some pricing power and it makes sense for the manufacturers to take pricing since all of the tobacco companies are facing higher Master Settlement Agreement [MSA] payments during 2007, Herzog wrote. Furthermore, we believe the manufacturers are more comfortable taking pricing soon given that state excise taxes did not increase substantially in 2006.
Herzog noted that PM USA held a two-day meeting with sales representatives last week.
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