Philip Morris to Raise Tobacco Prices by 6.8%

Source from:  Korea Times 02/03/2012

Beginning Feb. 10, signature cigarette brands Parliament and Marlboro of Philip Morris International (PMI) Korea, will sell at 2,700 won a pack, up by 200 won, while the price of Virginia Slim will go up by 100 won to 2,900 won. The price hike of 6.8 percent on average follows similar increases by competitors in the domestic market. "PMI Korea has not increased the prices of its products since 2002. Unavoidably, the company faces pressure to do so as payrolls and costs of raw materials have jumped over the past decade," a Seoul analyst said. "Now all eyes are on KT&G on whether or not the market leader will do the same as its other two rivals, British American Tobacco (BAT) Korea and JT International (JTI) Korea, have already raised their prices." A pack of cigarettes from BAT Korea and JTI Korea went up by 200 won last April. KT&G vowed they would not raise their prices and the government is believed to be pressuring the company due to runaway inflation rates surpassing 4 percent over the past year. Nevertheless some observers expect KT&G will eventually give in to price adjustments for a soft landing on their bottom line. When contacted, the tobacco manufacturer, which accounts for the majority of sales in the local market, said it is currently reconsidering price policies and announcements will be made shortly. The last time KT&G cigarettes went up was by 500 won in 2004. However the appreciation resulted from an increase in taxes meant KT&G did not gain much in revenue from the higher price tag. Enditem