Three U.S. tobacco manufacturers, including two Triad companies, raised list prices paid by wholesale and direct purchase customers. R.J. Reynolds Tobacco Company and Phillip Morris USA brought increases into action Monday following Lorillard Inc that raised prices on Friday.
R.J. Reynolds raised the list price on 7 of its cigarette brands by 6 cents, while Lorillard and Phillip Morris USA brought in operation across-the-board increases of 8 cents and 6 cents, correspondingly.
Sherry Jarrell, Wake Forest University professor, said that the increase of prices for tobacco products was obvious.
Jarrell, a professor of finance and economics said that these three tobacco companies have not dare as long as they could to increase prices in reply to tax increases.
She added that one company should go first. They could not hold on anymore. Their advantages were decreasing too much and they want to begin cutting labor, begin firing people unless they increased cigarette prices a little bit.
Jarrell said retailers usually have not given wholesale price rises to their customers and she would not expect that now.
“The single method it would have meaning for them to do that would be if they would not drop any demand altogether. They take as much of it as they can to save the prices as low as possible to sustain their benefits,” said Jarrell.
But it may be not so long before retailers see they have no choice.
“At a given time we must pass that cost on to our consumer, regretfully. But we have to apparently try to remain as commercially viable as we can,” said Account Executive Jeff Mercer, with Family Fare Stores.
Sherry Jarrell said the tobacco companies were not increasing prices simply because they could. She said there was no proof that companies had any pricing power in the marketplace.
“I consider it as they simply want to stay afloat in a severe environment,” she said.
Representatives from tobacco companies R.J. Reynolds and Lorillard refused to give interviews to News 14 Carolina. Both companies said it is company policy not to say about pricing.