Manufacturers hike cigarette prices in advance of April 1 taxes

Ahead of a massive tobacco tax increase on April 1, PM and Lorillard weighed in and increased cigarette prices – 9 to 18 cents a pack.

Customers are going to have a difficult enough time funding their smoking pleasures from April 1 without manufacturers raising prices as well in this economy.

While Schip was being debated –┬áBig Tobacco argued that higher taxes (read prices) would adversely impact lower income consumers. What is their position now?

32 comments ↓

#1 CIG GUY on 02.13.09 at 11:16 PM

It’s all about trying to sneak it in before the eruption. It’s real zoo out there as the manufacturers prepare for 1998 all over again. Everywhere you look another state is talking about raising taxes also. Tobacco will stay resilient and it will stick around but it’s going to be a pretty rough course ahead. The real losers will be the businesses that relied heavily on selling a legal product and have no options. I’d be looking too sell alternatives but nothing really satisfies like a cigarette when you like to smoke!

#2 Bill Godshall on 02.15.09 at 4:07 PM

Gradually raising prices is the only way to keep the cigarette price elasticity down (i.e. because it prevents sticker shock), and it is likely that other manufacturers will follow Altria’s lead.

Overall, SCHIP will increase the retail price of cigarettes by 17%-18%, which will reduce consumption by 7%.

The retail price of little cigars will increase by about 50%, which will reduce consumption by about 20%.

The retail price of large cigars will increase by about 20%, which will reduce overall consumption by about 8% (but due to the $.40 cap, retail prices of premium cigars won’t increase more than 10%, and consumption declines probably won’t exceed 4%).

The retail price of RYO will increase by about 50% (or more), which is likely to reduce consumption 20% (or more).

With a $.07/can tax increase, retail prices of moist snuff will increase by just 2%-3%, which is likely to increase moist snuff sales (because more smokers are likely to begin using snuff since the price of cigarettes and RYO is going up at a far greater rate.

#3 TAZ on 02.17.09 at 5:54 PM

Bowling Green, Kentucky-based cigarette maker Commonwealth Brands (Imperial Tobacco Group) said effective with orders placed after 4pm Central Time on February 13th, it has adjusted the price of USA Gold, Malibu and Riviera cigarette brands to $19.45 per carton, Sonoma to $16.50 per carton, Montclair to $19.80 per carton, Rave to $14.70 per carton, Davidoff Premium to $33.53 per carton and Davidoff Black & White to $50.00 per carton. (Commonwealth Brands Press Release 02/13)

#4 TAZ on 02.19.09 at 5:11 PM

The US Alcohol and Tobacco Tax and Trade Bureau (TTB) has published at http://www.ttb.gov/index.shtml guidelines for implementing the Federal excise tax increase on tobacco products, the American Wholesale Marketers Association said. (AWMA 02/19)

#5 supercallousSi on 03.01.09 at 3:06 PM

“Overall, SCHIP will increase the retail price of cigarettes by 17%-18%, which will reduce consumption by 7%.” OR more likely will lead to a greater loss to the coffers when smokers turn to illegal alternatives.You’ve tried to argue your figures on http://tobaccoanalysis.blogspot.com/ but never appear to have all that much success since you always minimise the level of blackmarket involvement.

#6 The Dark Knight on 03.01.09 at 8:49 PM

It’s amazing that folks don’t realize how much volume ends up in the black market, but I know part of this is PM always denying the issue. They know the numbers but are fine playing dumb!

#7 TAZ on 03.05.09 at 9:52 AM

THE LOADING OF PRODUCT MUST STOP!
VOLUMES GOING THRU THE ROOF!

Effective with shipments on March 9, 2009, Philip Morris USA is increasing its list prices on ALL cigarette brands. The March and April 2009 PM USA Off-Invoice Promotional Allowances remain unchanged for applicable cigarette brands.

In summary:

Marlboro
Parliament
Virginia Slims
Basic

All will increase $7.10 per carton (.71 per pack)

Merit
Benson & Hedges

All will increase $8.07 per carton (.81 per pack)

#8 CIG GUY on 03.05.09 at 10:37 AM

Well this will take the average selling price of a pack of cigarettes above the $5.00 plateau in the US. At the same time you will see the average slling price of a can of Moist Smokeless go down. PM will be cutting price at the end of the month. Wonder if PM wants to change their FDA stance on relative harm now?

#9 TAZ on 03.06.09 at 12:45 AM

The price of all Lorillard products has increased effective
March 6, 2009 by $7.10/carton.

#10 TAZ on 03.06.09 at 5:43 PM

RJ Reynolds Tobacco Co said March 6th that effective March 16th, it will raise the list price on Camel, Kool, Winston and Salem cigarettes by 44 cents per pack, on Pall Mall and Doral by 41 cents per pack, on GPC by 71 cents per pack, and on Vantage, More and Now by 78 cents per pack. The price of Camel snus will remain unchanged, a company spokesman said. (Reuters 03/06)

#11 Cogswella on 03.06.09 at 6:11 PM

I was paying $6.56 for a pack of Newport lights, as of today, march 6th, 2009, I am paying $8.04 a pack. This increase is nuts and now I see it’s just the stores increasing the costs of cigaretts before April 1, 2009. The store I buy mine at said they’d be increasing the cost again April 1st. Is this ok to do? Is it against the law? I don’t understand, but I can tell you that I plan on quitting and I’m sure that’s what the Government wants too.

#12 Cig Guy on 03.06.09 at 11:10 PM

I’d say you should go to another location as it seems like they have doubled the increase. Sounds like they don’t understand how to price. That $.71 cent per pack I think will be the end of the increases hopefully. I had a retailer tell me that this was the April 1st increase. It was meant to help retailers from what he said reduce his inventory to minimze the floor tax burden and enable them to possibly make a little money in addition to raising the funds to pay the floor tax. This makes me wonder if this kinda will start the SCHIP funds in the hole if retailers reduce their inventories. Any thoughts?

#13 jancascade on 03.07.09 at 1:12 AM

Cig Guy,

Yes, SCHIP will start off in a hole. Retailers have been very conservative in their buying since Mr. Obama was elected, we all knew SCHIP would be fast-tracked. There has been a big impact on the states excise tax revenue in the 4th Qtr and there will be even less excise taxes paid to the states for the 1st Qtr. 09. No retailer I know has deep pockets so everyone is doing what they can to minimize the impact of the floor tax on their businesses. The federal government will have to hand the floor tax over to the states to shore up their exisitng health plans.

Most retailers are reducing their offerings, no longer able to floor a large inventory. The SCHIP tax will be drastically change tobacco retailing and of course decrease revenue collections for all.

#14 Hawaiian Lion on 03.07.09 at 11:57 AM

I’ve been paying $3.99 per pack for Kool 100’s in Brighton, Colorado. My wife spoke to several merchants in the area (grocery stores, liquor stores, and cigarette stores), and the word she is getting is that the prices are jumping up to $6 per pack! The sad thing is that everytime cigarette prices jump, I complain like there’s no tomorrow, swear that I’ll quit, then continue to buy. I guess we’ll see how I deal this time, because although i could easily “pay” the new price, four teenagers in the house (two of which smoke) makes it difficult to be able to “afford” the new prices.

#15 jancascade on 03.07.09 at 3:16 PM

Go online and find an e-cigarette to use and cut down on the number of regular cigarettes you smoke and save yourself some money too. They are a useful pacifier in places where cigarettes are banned and to replace some of the regular cigarettes you smoke, in this era of excessive and punitive taxation with no real aid in helping smokers quit, other than by constant tax increases you have a choice you have not had with past tax increases, quit (easier said than done and the tax hogs know it) not this time, even if the government banned e-eigarettes as Austrailia has done, people who want them will just buy them online. Smokers did not have a choice in the past except to quit or pay, but they do now. It will be fun to watch this development dry up their funding at last.

#16 smoky on 03.07.09 at 3:33 PM

A little item that interests me. I drink diet coke, not good for me I’m told, will eat the rust out of me, take the paint off but yet a couple of years ago I could buy 20 oz for $1.09, on friday I had this desire within me to have a diet coke and guess what i bought it $1.59. I drink at least 4 or 5 bottles a day. Hmm about the same I will pay for my pack of Newports. Sure glad I don’t drink coffee and visit Starbucks!

#17 smoky on 03.07.09 at 3:40 PM

by the way talking to a clerk about how pricing would be on cigs in the future is like getting dental advice from a jack hammer technician. Do the math folks – If a carton goes up $7.10 and after everyone takes their markups your what talking about a DOLLAR a pack increase.

#18 superticked on 03.09.09 at 12:51 PM

Higher taxes on Gigarrets don’t stop smokers. It doesn’t because they are addicted. The goverment knows this.They should use the extra tax to cover precription medications to help smokers quit. This could be a health care plan that actually works. Will they, No I doubt it. The real purpose for this increased tax is just that, an increased tax.

#19 Tommieboy on 03.10.09 at 4:31 PM

Talking to friend of mine today – They own a tobacco shop! They are closing on the 29th of March! Not much more to be said! Said they are tired of the battle!

#20 jancascade on 03.11.09 at 11:57 PM

Tommieboy, I can certainly understand how your friends feel. We are just retailers caught in the middle of a huge power struggle between big tobacco & big drug companies. We are also the governments business partners, retailers take all the risk and work the hours and government keeps taking and taking.

I am watching my RYO tobacco sell down, knowing we will not sell it after 3/31. We sold lots of it and paid our state thousands of dollars in excise taxes over the years and would have continued selling it if SCHIP had not priced it out of business. I would close my shop before I would sell domestic cigarettes.

Not sure what I will sell to replace my RYO, but whatever it is, it will have no excise taxes attached to it. I wonder if our state will miss their extortion fees?

#21 Proofer5 on 03.12.09 at 5:46 PM

I wish our local prices had only gone up 44 cents per pack. The entire local Flash Food chain raised their prices 90 cents a pack (nearly $10 a carton) for 4 different brands I buy each week: Marlboro, Vantage, Winston & Doral. And this is in advance of the extra taxes coming 1 April? Do we have any recourse for this early price gouging except to quit smoking?

#22 Sharon on 03.13.09 at 6:01 PM

Why Not Raise Alcohol Taxes there are probally more alcoholics then smokers and Some Alcohol drinkers drink and drive and kill innocent other people…
And under age drinking is at a all time high..But NO they make way to much money off booze…And they most likely drink it them selfs also…If a person chooses to smoke its the body.Why try and force what you want on other people?Do something worth while…

#23 cig guy on 03.14.09 at 2:20 PM

Hey proofer5,

The increase was the increase just early from the majors! Just lower your inventory to minimize your floor tax.

#24 jancascade on 03.14.09 at 4:54 PM

The tobacco companies are just letting the consumer pay their SCHIP taxes for them, just as they have allowed the smoker to pay their MSA payments.

I see them laughing all the way to the bank and thanking government and the anti tobacco cartel for allowing them to reap even greater profits.

#25 RENEGADE on 03.15.09 at 1:20 AM

So right! I hear that wholesalers are battling now over product in the public wharehouses. Tobacco companies are saying it’s not mine it’s your product. The wholesaler is saying it’s not mine it’s not in my facility. What a game these tobacco companies play at the expense of their customers. What an amazing deal these guys just pulled off. These tobacco compamies will pocket 21 days of increased profits at the retailers expense and ultimately the consumer. Just AMAZES ME THAT NO ONE HAS POSTED THIS THOUGHT UNTIL JANCASCADE!

#26 jancascade on 03.15.09 at 4:32 PM

I have been watching the antics of big tobacco and the anti tobacco cartels for over ten years now. The cigarette companies have off-set their “quiter” loses by price increases and the MSA payments have been paid by smokers as well. They pay government like a fiddle and it is amusing to watch them get exactly what they want, market security and huge profits all in the name of health.

If cigarette smokers were smart, they would stop buying the major brands and choose a cigarette made by one of the small companies or switch to the e-cigarette and stop paying into the taxing scheme too.

Anti tobacco has always been about money and the most of the anti tobacco cartel is up in arms over the e-cigarette, they see their gravy train being derailed.

#27 smoker gal on 03.16.09 at 11:20 PM

Anti tobacco really are so corrupt it amazing. Wish someone like a Michael Moore would do some good and expose the corruptness of the anti tobacco cartel and big pharms.

#28 Belfast on 03.22.09 at 3:18 PM

Wish i could quit, but i can’t.already dropped my auto insurance to help cover the cost of this addiction. i’m going to attempt to write off taxes as medical expenses, since it’s clear it’s funding CHIP. Buddy is working on a hybrid of tobacco, crossing it with parsley and also with a tomato. if successful- this hybrid will be sold as a vegetable and cannot be classified as tobacco. they could then tax fatty foods for their money.

#29 RYORebel on 04.12.09 at 9:43 PM

Here in Chicago where a pack of the most bought brands of cigs was hitting people for about $7-$9 bucks a pack for well over the last year or so, I thought I was in good shape comparatively because I roll my own and was averaging under 3 bucks a pack. I smoke a good quality RYO (Charles Fairmorn Bright Virginia Shag) and now, this 6 dollar can that would net me about three packs of cigs has doubled in price in the shops to 11-12 bucks! I know that even when I figure in the cost of my my rolling sleeves I’m still under 5 bucks a pack but when you add in the fact that my roomate and I share the stuff, it goes so fast that we don’t know what the hell to do now. The store bought packs around here have now hit the $10 and up dollar mark so there’s no relief there for us either. Store owners have signs advertising “Cigarettes! Get 2 for $20” because they really believe it’s a sale as opposed to buying just one pack that hits you after tax for like $11!!! Went online to see if my beloved Fairmorn Bright was cheaper there and it jumped form being $4.50 online to $8-$8.50 (not including tax and shipping depending on where you get it.) And the alternatives like a pouch of American Spirit or Bugler Gold have diminished greatly in the AMOUNT OF TOBACCO they put in the pouch (netting about one pack of smoke now compared with almost two before) and they have increased from $2 to a scary $5 and up for the now flimsy pouch. I heard that RYO would be hit hardest. Guess they were right over here.

#30 Shellymaywin on 04.14.09 at 7:34 AM

I have been rolling my own cigs. for 5 years, which takes my time and has been a cheaper way to smoke. Gambler was $9.95 for a 6 oz. bag which makes one carton. As of April 1, 2009 its now $31.00 for 6 oz. Who is getting this money? It went up 200% that is just wrong. And no one is answering me who is getting the money. We need to unit and stop this outrage, I don’t want to quit is this america a country of freedom anymore?

#31 FEDUP on 04.19.09 at 12:53 AM

Shelly come on now you wonderful government is taking it from everyone so Nancy can waste it with King Obama!

#32 mekmek on 12.15.10 at 2:00 PM

do anyone smoke handrolled cigarettes since cigarettes are too expensive today.

Leave a Comment