Cigarette Price Increase

Recently the cigarettes prices were raised. Altria Group Inc raised the price of Marlboro and other cigarettes by 71 cents to 81 cents per pack, in spite of this the cost of the high-end smokeless tobacco brands were lowering.
In February, President Barack Obama signed a law expanding a health program to include 3.5 million uninsured children. The expansion is being paid for by raising the federal tax on cigarettes to $1 per pack from 39 cents per pack. Taxes on cigars and other tobacco products will also rise.
The latest increase comes after Philip Morris, the largest U.S. cigarette maker, raised prices by about 9 cents per pack in February.
The company, which is owned by Altria, is now raising prices by 71 cents per pack on brands including Marlboro, Parliament, Virginia Slims and Esse Slims. Other brands, such as Benson & Hedges and Merit, will see an increase of almost 81 cents per pack.
Altria’s John Middleton cigar business is raising prices by 41 cents per pack for a five-pack of cigars immediately.
Instead of the cigs increases, smokeless tobacco prices will go down. Altria made these changes for to decrease U.S. cigarette markets. For example Altria, which wants its smokeless brands to be seen as a better value versus competitors, is lowering the list price on Skoal and Copenhagen by 62 cents per can and the price of Red Seal by 27 cents per can. However, the lower-priced Husky brand will get an increase of 20 cents per can. Altria is also discontinuing the Rooster brand.

This news could be viewed as a negative for Reynolds American Inc, since the price cut on Skoal and Copenhagen is larger than expected.

Scientists reported that an additional tax added to the cost of cigarettes would bring about a reduction in cigarette consumption and increased tax revenues. It would also help reduce incidents smoking-related illnesses.

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