The top Cigarette Makers have recently declared cigarette list price boosts.
Altria declared to the trade on November 11 that it would increase list prices throughout its key brands cigarette portfolio by 7 cents per package or 70 cents per carton (about 2% to 3%) starting November 15.
“From a timing standpoint, this price boost comes in accordance with the Philip Morris USA’s cigarette price boost last year, which was declared on November 12, 2014, and became effectual on November 16, 2104,” Bonnie Herzog, Wells Fargo Securities expert Bonnie Herzog. “We also come across PM USA’s timing interesting considering that Reynolds American’s new retailer agreements become effective in a few days along with given ITC’s stepped-up advertisements behind Winston.” She added, “This price boost is favorable and illustrates the industry still possesses very solid pricing power, which is approaching the heels of numerous quarters of very powerful net price acknowledgment for the producers (6% to 7%). In view that underlying cigarette industry use will most likely go back towards its ongoing trend of decreasing, pricing continues to be a critical driver of profit and earnings increase.”
This is the second price boost this year, absolutely consistent with the company’s approach of increasing prices twice a year, RBC Capital Markets expert NikModi stated in an investigation note. Needlessly to say, R.J. Reynolds Tobacco, Santa Fe, Ligget Vector Brands and ITC all declared cigarette price boosts of seven cents per cigarette package.
Reynolds announced a 7 cents per package increase on its major growth brands; Camel cigarettes (not including Non-Filter), Pall Mall Box, Newport, Doral and Red Kamel, but added a 8.8 cents per package boost on Camel Non-Filter, Pall Mall and some other of its non-growth brands, stated Herzog, “which is to be compensated by marginally larger discount terms on these non-growth brands apart from the brands obtained from Lorillard.”
Reynolds’ price boost evolved into a more effective on orders placed after November 12. ITC declared seven cents per package boost on Winston, Kool, Salem and Maverick, starting Novembe 13. “ITC made no adjustments to its present off-invoice discount values for virtually any of its brands and mentioned to its customers that the full value of all off-invoice advertising allowances should be passed on to their customers,” Herzog explained