Cigarette Prices Rise Ahead of FET

NEW YORK -- At least two U.S. cigarette makers upped cigarette prices and another is cutting some wholesaler discounts as demand drops, following the passage of a bill that will increase the federal excise tax on cigarettes by 61 cents per pack to $1.01 total, The Associated Press reported.

Altria Group Inc., which owns No. 1 cigarette maker Philip Morris USA (PM USA), and Lorillard Inc., which makes Newport cigarettes, recently increased carton and pack prices, the report stated. Altria raised wholesale prices by nine cents a pack or 90 cents per carton on its signature Marlboro line and Virginia Slims, Basics and other cigarettes rose, spokesman Greg Mathe told the AP. In addition, second tier cigarettes made by PM USA, including brands like Chesterfield and Merits, saw a price increase of 18 cents a pack or a $1.80 a carton, he said.

Mathe said the hikes followed a "periodic evaluation" of Altria's strategies and aren't a response to the looming federal tax increase. "We've been dealing with a declining cigarette market for a number of years now and it's how we can best manage the business in that type of environment," he said.

Lorillard raised all its wholesale prices 10 cents a pack, totaling $1 a carton last week, the company told the AP. Lorillard declined to comment about its reasoning for the price increase.

Meanwhile, Reynolds American Inc., the nation's second-largest cigarette company, cut some of the discounts it offers wholesalers for the month of March, after a reported 13-percent drop in its fourth-quarter profit, partly due to selling fewer cigarettes, the AP reported.

Reynolds cut back on discounts "to remain competitive in the marketplace," company spokesman Frank Lester told the AP, adding Reynolds hasn't decided how long the discounts will be cut.
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