According to Goldman Sachs, British American Tobacco (BAT) has raised cigarette prices for the fourth time this year. Bonnie Herzog, Managing Director of the New York-based investment management firm, stated that although the timing of the price increase was expected, the extent of the increase - particularly for smaller brands - exceeded expectations.
British American Tobacco has increased the price of Newport menthol cigarettes, Camel and Pall Mall Box by 15 cents per pack. The non-menthol version of Newport cigarettes has been raised by 25 cents, while Pall Mall non-filter and Pall Mall Vintage Gold have each been increased by 38 cents per pack. According to a spokesperson, British American Tobacco has implemented price increases on several of its brands previously, but Lucky Strike has not been affected at this time.
A London-based tobacco company owns Reynolds American Inc., headquartered in Winston-Salem, North Carolina. Reynolds American is the parent company of RJ Reynolds Tobacco Company and has increased prices for oral tobacco. The prices for Camel Snus, Grizzly Snus, and three other oral tobacco brands have increased by 9 to 13 cents per can. The cost of Natural American Spirit Roll-Your-Own tobacco will increase by 40 cents per can.
Herzog announced that these changes will take effect on January 2, following Altria's announcement in October of a 15 cent increase per pack and the latest increase from British American Tobacco in August.
Herzog said, "Looking to the future, as the industry continues to successfully implement price increases to offset ongoing sales pressures, we continue to expect robust net pricing growth." He added, "While there is an increased risk of potential price-cutting deals, and concerns about the manufacturers' pricing power declining... we believe that brands like Marlboro, with a very loyal customer base and effective promotional activities, should be able to maintain their franchise with these consumers.
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