Philip Morris Raises Cigarette Prices

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Philip Morris Raises Cigarette Prices

CHICAGO -- In a move expected by industry analysts, Philip Morris USA raised its prices on all its cigarette brands by 10 cents per pack, effective Dec. 18, Reuters reported.

The price increase will lower promotional discounts the company provides on its Marlboro, Virginia Slims, Parliament and Basic brands. Meanwhile, it will raise list prices on other brands, a spokesman for Philip Morris' parent company, Altria, told Reuters.

The promotional price changes will raise the average price per pack for its top-selling Marlboro brand to $4.04 a pack, from $3.94, Reuters stated. Those increases will vary if retailers also add to the increase, the report stated.

A six cent price increase was all that was needed to cover increased payments to the Master Settlement Agreement by Philip Morris, said Citigroup analyst Bonnie Herzog.

"However, overall we believe this proves there is still some pricing power left for the industry," she said in a research note. "We expect the other manufacturers will follow suit."

Philip Morris' last price increase was in December 2005, when it raised prices by 5 cents per pack, Reuters noted.

In other Philip Morris news, the company is expected to roll out a new Marlboro-branded menthol cigarette in February called "Marlboro Smooth," reported the Business Journals of the Greater Triad Area.

The brand will compete directly with Lorillard Tobacco Co.'s Newport brand of menthol cigarettes, according to Herzog.

"Our contacts stated that in a consumer test, 40 percent of Newport smokers indicated they prefer the new Marlboro smooth and would purchase it if they had the opportunity," Herzog wrote in a note to investors.