Altria Group Inc. recently announced about its plans to increase prices on its several cigarette brands and smokeless tobacco products. The famous manufacturer wants to reduce its off-invoice promotional allowance by 7 cents per package on L&M and Marlboro cigarette brands.
Besides this, Altria’s subsidiary, Philip Morris USA has raised prices on cigarettes by 7 cents per package and Marlboro Snus Tins by 6 cents. The price increases are in effect from December 1. They do come after the company raised the cigarette prices on all the brands in June.
Leading tobacco companies are increasing prices as part of their strategy to fight tough industrial conditions. These days many governments across the globe are imposing higher taxes on tobacco products, which makes tobacco companies raise prices to maintain their margins.
Lorillard Inc., the Kent maker, declared in November 2013 that it will increase prices by 6 cents to 7 cents per pack and this came in effect from the first week of December. R.J Reynolds, a subsidiary of Reynolds American Inc. also hiked the price by 7 cents on its cigarette brands Camel and Pal Mall.
Various restrictions and anti-tobacco campaigns imposed by governments worldwide do also affect tobacco industry. This results in declining shipment volume due to lower tobacco use worldwide. Experts consider that tobacco consumption would lower in next quarters.
Altria has weathered unfavorable tax environment with price increases. In fiscal year of 2012, Altria increased two times cigarette prices on all its brands in July and November. The stable market share and volume of Altria’s brands despite price increase demonstrate the company’s strong business model and strength of its major brands.