Philip Morris USA Takes Third Price Increase This Year

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Philip Morris USA Takes Third Price Increase This Year

10/22/2019
Altria headquarters

RICHMOND, Va. — Philip Morris USA (PM USA) ticked up the list prices on several cigarette brands.

The 8-cent per pack increase affects Marlboro, Basic, Benson & Hedges Menthol Green, Cambridge, Chesterfield, L&M, Lark, Merit, Parliament, Players, Saratoga and Virginia Slims. The increase, which translates to approximately 2 percent to 3 percent, does not affect Marlboro Heatsticks.

It is the third time this year that PM USA, an operating company of Richmond-based Altria Group Inc., hiked prices, according to Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities LLC.

Historically, the tobacco company has taken two price increases annually. PM USA took a 6-cent list hike in June.

The latest move was effective with shipments as of Oct. 20.

U.S. Smokeless Tobacco Co. (USSTC), another Altria operating company, took a 4-cent per can list price increase across its core SKUS, including moist smokeless tobacco, snus and dry snuff tobacco — Copenhagen, Skoal and Red Seal brands.

In addition, USSTC took a 9-cent per can increase on Copenhagen Popular Price brands, Skoal XTRA/Skoal Snus, and a 4-cent per can increase on WB Cut, effectively narrowing the relative price gap between premium and price-value brands, Herzog said.

The increases went into effect with shipments as of Oct. 22.

"Overall, we believe the price increases announced [Oct. 16] are positive and demonstrate the industry's strong pricing power, which follows several quarters of solid manufacturer net price realization (approximately 6 percent)," Herzog explained. "This trend is important given ongoing secular declines in volume and will likely face even greater pressure under the Food and Drug Administration's effort to lower nicotine levels in combustible cigarettes, an event we continue to view to be several years away given the complexities of issues ahead."