RICHMOND, Va. -- As reported in a CSP Daily News Flash yesterday, Philip Morris USA said that it is reducing the current off-invoice promotional allowance offered on its Parliament cigarette brand for the time period of Jan. 7, 2008, through Feb. 24, 2008, by $1.50 per carton from $3.50 per carton to $2 per carton.
It is also eliminating the current $2 per carton off-invoice promotional allowance on its Virginia Slims cigarette brand for the same time period, according to PM USA spokesperson William Phelps.
Reductions in promotional [image-nocss] allowances are typically passed on to consumers in the form of higher prices, said Reuters. PM USA effectively raised the price of Parliament by 15 cents per pack and the price of Virginia Slims by 20 cents per pack.
Parliament and Virginia Slims had U.S. retail market shares of 1.9% and 2.2%, respectively, in the third quarter of 2007. During the same period, PM USA's core Marlboro brand had a 41.1% share of the U.S. retail market.
The action follows a move in early September, when the company instituted a 50-cent reduction in the off-invoice promotional allowance per carton for the Marlboro, Parliament, Basic and L&M brands, reducing the total allowance from $4 a carton to $3.50. It also instituted reduction of the off-invoice allowance for Virginia slims by $2 a carton, reducing the total allowance from $4 to $2.
And while the company did not change its allowances for its other brandsincluding Benson & Hedges and Chesterfield Box, among othersit increased the list prices for those brands by 50 cents a carton.
"We're trying to achieve our business objectives and we're always analyzing the market placeto help us determine the appropriate level of promotional spending," Phelps told CSP Daily News at the time.
The last price increase (off-invoice reduction) taken by PM USA before that was a $1 per carton in December 2006 (60 cents per carton of this increase offset the step-up in MSA payments).
Winston-Salem, N.C.-based Reynolds American and Greensboro, N.C.-based Lorillard followed PM USA's lead in September.
Richmond, Va.-based PM USA is a unit of Altria Group Inc., New York.
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