Downtrading – uptick?

Another sign, or is it a symptom, of the deteriorating US economy are reports from several sources of cautious volume increases in the discount cigarette sector. Several producers have confirmed increased volumes recently.

While good news for independent producers – who can always do with some help, it may not be quite such stellar news for the full-price segment.

Any opinions or news anybody?


#1 TAZ on 12.11.08 at 12:29 PM


RICHMOND, Va. — Philip Morris USA, the largest U.S. cigarette maker, raised prices on some of its brands and made adjustments in its promotional spending that could result in higher prices for top-selling Marlboro in some markets, said a Reuters report.

The company raised prices on brands like Parliament, Virginia Slims, Chesterfield and Merit by 5 cents a package.

It also cut certain promotional allowances on Marlboro and Basic cigarettes by 5 cents per pack, Philip Morris spokesperson David Sylvia told the news agency.

But in other markets, the company increased special promotional allowances on certain types of Marlboro offerings, which could result in lower prices in those markets.

Richmond, Va.-based Philip Morris, a unit of Altria Group Inc., New York, gives retailers and distributors promotional allowances that tend to be passed on to consumers in the form of higher or lower cigarette prices, said Reuters, although such price changes are not automatic.

#2 Big Tuna on 12.12.08 at 2:58 AM

To follow up Lorillard does the right thing and raises the cost on a pack by $.05 but wholesalers and retailers also benefit slightly – no real benefit to the wholesaler or retailer when Philip Morris reduces the promotional allowance. As a retailer it’s only pennies on a carton but it still is a plus to my margin! It will be interesting as it’s been some time since RAI has had an increase. Gotta think they will take a slight increase. I pretty much expected the increases. Just glad it wasn’t on a holiday weekend. Nice to get it all done before the holidays and I will reap a slight increase in profit as I turn my Newports over the next few weeks!

#3 TAZ on 12.12.08 at 10:40 AM

In reading the above entry from Big Tuna, Big Tuna is incorrect as the increase from Lorillard was a $1.00 per carton. The increase in cost on a pack would be $.10 a pack.

#4 The Dark Knight on 12.16.08 at 3:17 AM

I have seen an increase in my low end cigarettes over the past 6 or so months as folks are finding that some of the lower priced brands like Selects or Sonomas are pretty decent offers! With the prospect of increases in state and federal taxes there will be more down trading at the old smokers post!

#5 The OTP Kid on 01.08.09 at 11:50 AM

Sonoma, USA Gold and the rest of the Commonwealth Discount Brands all raised their prices again on December 31st. They also took away another .25% away from my discount. I guess they have to pay for their Davidoff debacle!

#6 Snowball on 02.01.09 at 6:56 PM

From my research, I do believe that the low end is growing again. It will be very interesting to see at what rate the low end grows once the new federal excise tax is put in place.

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