Tobacco Cos. Follow Suit With Cigarette Price Increases

NEW YORK — More cigarette brands will see price list increases, following Altria Group Inc.'s lead when it hiked the prices of its Philip Morris USA (PM USA) portfolio.

According to Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities LLC, Reynolds American Inc. (RAI), ITG Brands LLC and Liggett Vector Brands are taking wholesale list price increases of 8 cents per pack — an increase equal to approximately 2 to 3 percent — on their key cigarette brands.

ITG Brands is taking a 16-cent-per-pack increase on its other brands, she added.

These list price changes are effective for orders billed after the Nov. 10 cutoff or starting Nov. 11. There are no changes to the current off-invoice discount values of $14.40 per carton for RAI's Newport Non-Menthol Styles, according to Herzog.

The moves by the three companies, including RAI's operating company Santa Fe Natural Tobacco Co., come a day after PM USA's 8-cent increase, as CSNews Online previously reported. The moves come roughly a week earlier and a penny more than expected.

The pricing moves also follows the passage of Proposition 56 in California, which increases the state's cigarettes excise tax by $2 per pack. Known as the California Healthcare, Research and Prevention Tobacco Tax Act of 2016, the proposition will also place an equivalent tax increase on other tobacco products and electronic cigarettes containing nicotine.

"These price increases are positive, indicating the industry’s pricing power and its ability to offset any volume declines associated with the coming tax increase in California," Herzog said.