R.J. Reynolds, Lorillard Follow Suit With Cigarette Price Hikes

NEW YORK -- Philip Morris USA (PM USA) is not the only tobacco company raising the price of it cigarettes. One day after news broke that PM USA's cigarette list price would rise by 6 cents across the board, competitors R.J. Reynolds and Lorillard Inc. countered with list price increases of their own.

R.J. Reynolds will increase its prices by 6 cents a pack across most of its brands; the uptick is effective immediately with all orders placed starting today. Lorillard is taking the largest increase, at 8 cents per pack on all brands, which is also effective on orders billed starting today.

"The magnitude and timing of these list price increases are generally in line with what we expected based on results of our recent Tobacco Talk industry trade surveys, although [Lorillard's] 8-cent per pack increase is slightly higher than expected," said Bonnie Herzog, managing director, beverage, tobacco and consumer research at Wells Fargo Securities LLC.

"We are encouraged by these price increases as they signal that the tobacco industry still has robust pricing power," she added.

In announcing its price increase, Lorillard noted that there is no change to the $15 "off invoice" promotional allowance on its Newport Non-Menthol brand, the full value of which must be passed along to customers, Herzog added.

As for R.J. Reynolds, the company is also implementing a 10-cents-per-can price increase on Camel Snus. That is double the increase PM USA took on Marlboro Snus, as CSNews Online reported.