US Brands Deal With New Market Realities

Source from:  Tobacco International 05/08/2009

R.J. Reynolds Tobacco Co. raised the list price on its cigarette brands in the range of 41 cents to 78 cents a pack for wholesale customers in mid-March. Camel, Kool, Winston, and Salem will go up 44 cents a pack, and Pall Mall, Doral, and Capri will go up 41 cents. Its other brands will go up 71 cents to 78 cents a pack, depending on the brand. Analysts projected the sharp price increases before Congress passed the 62-cent increase in the federal excise tax to pay for expansion of the State Children's Health Insurance Program. That tax increase took effect April 1. Reynolds is not the only manufacturer raising prices. The Altria Group Inc. recently announced it would be increasing the list price for certain brands including Marlboro, Virginia Slims, and Parliament by $7.10 a carton, and the list price for other brands that include Benson & Hedges, Chesterfield, and Merit by $8.07 a carton. However, they decided to lower the prices on smokeless goods, a venue they have been vigorously persuing. Altria has plans to cut prices for Copenhagen and Skoal the smokeless tobacco brands it acquired through its purchase of UST Inc. by 62 cents per tin. The lower prices could boost volumes of Altri's smokeless brands and make them more attractive to consumers. Altria's move to lower smokeless prices could mean fresh competition for Reynolds American Inc. (RAI), which sells smokeless tobacco products like popular discount brand Grizzly through its Conwood unit. Lorillard Tobacco Co. is also increasing its list price by $7.10 a carton, according to Pat Shehan, the owner of Tarheel Tobacco in Winston-Salem. Enditem