Lorillard Joins Altria In Pricing Action

Tobacco companies enact pricing adjustments, raising the cost of popular cigarette brands in the next few days.

By David Bennett, Senior Editor

Lorillard Inc. (LO) is pushing through a six-cent per-price increase across the some of its key cigarette brands, a move that will keep pace with rival Altria Group Inc., according to analyst reports.

The Greensboro, N.C.-based tobacco maker of Newport and other popular brands will enact the price action effective for orders billed starting Friday, May 9.

Lorillard will increase its list prices on key brands included Newport Menthol, Newport Non-Menthol and Maverick. Lorillard’s May 8 price adjustment comes just one day after Altria (MO) proposed a six-cent per-pack hike on Marlboros.

This follows Altria’s (MO) leading action yesterday when PM USA announced a list price increase of 11 cents per pack on Parliament and 6 cents pack on other cigarette brands, including Marlboro, while cutting the off-invoice promotion allowance on Marlboro and L&M by six cents per pack, from eight cents per pack.

New allowances will be 2 cents per pack on Marlboro and 15 cents per pack on L&M, effective May 11.

Price protection on Marlboro will take place through May 25, however.

Wells Fargo Securities analyst Bonnie Herzog wrote in a note to investors that she believes wholesalers have been building up their inventories in anticipation of price increases.

“This could offset volume pressures due to e-cigs/e-vapor products,” Herzog said. “We expect overall cigarette net price realization of about 4%.”

 

 

css.php