RICHMOND, Va. — Altria Group and Philip Morris USA have announced a 15-cent-per-pack cigarette list price increase for some brands.
Marlboro, Chesterfield, L&M and Basic Simple Tobacco packs will all go up 15 cents while Basic, Benson & Hedges, Benson & Hedges Menthol Green, Merit, Nat’s, Parliament and Virginia Slims will see a 20-cent-per-pack increase, Goldman Sachs Managing Director Bonnie Herzog said in a research note.
The price increases were effective as of Dec. 12, and follow competitor British American Tobacco’s 14-cent-per-pack increase on several of its cigarette brands.
Altria’s price increase is in line with its roughly 120-day announcement schedule given its last cigarette price increase was in August, Herzog said. The company is implementing a manufacturer supported off-invoice (MSOI) promotion for all Marlboro SKUS in select states, she said, in addition to other promotions.
“We continue to believe [Altria] has become more sophisticated and targeted with its pricing strategies and in some cases has been pulling back on promotional spending as a way to strengthen its net price realization,” Herzog said.
The strong price realization has been more than enough to offset continued cigarette volume pressure and is evidence of Altria’s robust operating margin expansion over the last three years, she said. However, Herzog notes that the relative price gap between Marlboro to the lowest effective cigarette on the market has widened over the last few quarters.
Altria Group, Richmond, Va., has several operating companies including Philip Morris USA, U.S. Smokeless Tobacco, John Middleton, Helix Innovations and Philip Morris Capital Corp.
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