philip morris raises prices lowers discounts

RJ Reynolds says “no changes in our promotional discounts.”

Philip Morris USA said yesterday it is raising prices as falling U.S. shipments dampen profit growth.

Philip Morris will reduce a promotional discount by 5 cents a pack to 35 cents on its Marlboro, Parliament, Basic and L&M brands, spokesman Bill Phelps said. It also will lower the discount on Virginia Slims by 20 cents a pack and raise prices of its other cigarette brands by 5 cents, according to The Winston-Salem Journal.

The changes will take effect Monday and last at least through Oct. 28. Philip Morris is charging more after forecasting that domestic shipments would fall by up to 4% this year.

Analysts said they expect Reynolds American Inc. and Carolina Group to raise their prices in a similar manner. Bonnie Herzog, an analyst with Citigroup, wrote that “while recent trends have shown that manufacturers have not always followed each others’ pricing actions, we believe that in this case it is likely that Philip Morris USA’s competitors will take up pricing.”

David Howard, a spokesman for Reynolds, said that “there are or the list prices of our products at this time.”

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