Increase in Tobacco Prices

tobacco price increase

 

In a recent announcement, the major tobacco company Altria Group Inc. stated that there is a list price increase of 9 cents per pack on all their cigarette brands. According to a report by RBC Capital Markets, the increase in price is higher than the company’s average 7 cents per pack increase.

According to an investment firm analyst out of New York, the changes in price began on shipments that went out yesterday and will continue all future shipments. It is expected for other tobacco companies such as British American Tobacco, along with it’s subsidiaries, to follow in Altria’s path.

“We note that Altria and the tobacco players typically announce biannual price increases around May and November, but a year ago this cadence was pulled forward to March and September to offset the California excise tax [increase on cigarettes],” said RBC, referring to state tax increases that began April of 2017. “We would expect another price hike around September or October.”

Even though the price increase was higher than Altria’s averages over time, it is lower than the increase of 10 cents which occurred in September 2017.

The increase in price has been viewed as positive by Wells Fargo Securities. Wells Fargo officials had the following to say in lgith of recent U.S. FDA announcements.

“This trend is important given ongoing secular declines in volume, which will likely face even greater pressure under the FDA’s effort to lower nicotine levels in combustible cigarettes, an event we continue to view to be several years away, given the complexities of issues ahead,” Wells Fargo officials said.

As predicted, other companies did follow suit in raising tobacco prices. R.J Reynolds has recently announced that they will be raising list prices on certain cigarette brands. The price increase will differ based on the cigarette brand.

There was an increase of 9 cents per pack on shipments that went out after March 22. The 9 cent price per pack increase effects what Reynolds calls their “drive” brands. Such brand include Newport, Camel, Pall Mall, Eclipse, State Express 555 and Red Kamel. According to RBC, along with their “drive” brands, the increase also applies to the super-premium brand Natural American Spirit.

Other R.J. Reynolds brands will see an increase of 49 cents a pack. Such brands include Camel Non-filter, Old Gold, Misty, GPC, Pall Mall, Lucky Strike, Carlton, Kent, Doral, True, Monarch and Vantage.

Along with its cigarette brands, Reynolds is also raising the prices of roll-your-own Natural American Spirit products.The 6 count case tin is being raised by 40 cents/tin and the 144-pouch case see an increase of 10 cents/pouch.