Altria/Lorillard cigarette prices increase..

February 12, 2009 - Though a federal cigarette tax hike remains weeks away (April 1, 2009), at least two U.S. cigarette makers already have upped prices, and another is cutting some wholesaler discounts as demand drops. Both Altria Group Inc., which owns Philip Morris USA, and Lorillard Inc., which makes Newport cigarettes, increased their carton and pack prices in recent days.

Lorillard raised all its wholesale prices 10 cents a pack or a $1 a carton last week, the company said. Altria raised wholesale prices for its signature Marlboro line and some lower-cost brands this month. Marlboro, Virginia Slims, Basics and other cigarettes rose nine cents a pack or 90 cents per carton, said spokesman Greg Mathe. Reynolds American Inc., the nation's second-largest cigarette company, which reported a 13 percent drop in its fourth-quarter profit Wednesday partly resulting from selling fewer cigarettes, has cut some of the discounts it offers wholesalers in March.

Changing their pricing lets cigarette companies spread the blow of tax hikes to consumers and raise extra money in a dwindling market, said Eric Lindblom, director for policy research at the Campaign for Tobacco-Free Kids. Manufacturers pay federal excise taxes on cigarettes, while wholesalers cover state taxes when they sell to gas stations, convenience stores and other retailers.

Related news brief: Philip Morris USA is raising prices again...

Reference: Cigarette price rises ahead of tax increase Federal hike starting April 1 will help pay for children's health care. by Jon Gambrell, The Associated Press, 2/12/2009.