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More price hikes due for cigarettes

Posted Mar 05 2009, 02:00 PM by Kim Peterson
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Will cigarette smokers have any money left for anything else? Altria Group (MO) says it will soon raise prices on Marlboro and other brands by 71 cents a pack. In less than a month, a federal excise tax will kick in to the tune of 61 cents per pack.

The Altria price hike -- the third in as many months -- is a reaction to the new federal tax. Altria thinks cigarette sales could drop a bit, so it's increasing prices to make up for the loss. Now, analysts at Credit Suisse expect Altria's revenue to grow this year instead of decline.

The average price for cigarettes will soon be above $5 a pack, according to Credit Suisse. That probably won't have much of an impact on smokers, the analysts said, since sales volume didn't really change in states where prices have already surpassed that mark.

I wonder, then, what is the price level that will finally turn off smokers?

So far, rival Reynolds American (RAI) isn't saying whether it will raise prices on its Camel brand of cigarettes. Reynolds didn't match the 9-cents-a-pack increase that Altria's Phillip Morris unit rolled out last month. The market seems to be rewarding price hikes: Altria's shares rose more than 3% Thursday on the pricing news, while Reynolds shares fell by nearly 3%.

That new tax increase, by the way, stems from a law signed by President Barack Obama in February that expands health coverage for 3.5 million uninsured children. The cigarette tax hike will pay for that expanded coverage.

A price war seems to be brewing in the smokeless tobacco category. Altria is cutting prices on cans of Skoal and Copenhagen by about 62 cents, according to Reuters. The company is trying to generate growth in that category after losing some momentum to cheaper competitors.

Image credit: AnthonyA7, public domain release

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Comments

 

They should tax cigarettes to the max to cover the health issues they cause. I'm tired of my premiums being high to cover all of the smokers and fat people. Either that or have your premiums based on an actual physical. The healthier you are the lower the premium. And so many are both fat and smokers.

Add ten dollars a carton plus all the other tax increases and that is what you have to pay in Texas.......dollar a pack to lower property taxes..........figured six to eith cartons a month for twelve months and nowheres near what my property taxes even were that high so i quit....also, ever wonder why no taxes on beer or whiskey or wine???....hits too close to home i guess with all the politicians...never heard of someone smoking running into and killing anyone in a car as the many drunk driving deaths  Some even havc ten drunk driving tickets and they still let them keep thier licenses!! ...guess they don't count.......................disgusted with State Gov't.

Get a life!   Get a Life

Just quit smoking Cigarettes! Now thats an idea. Its not like they are benefiting you (healthwise or financially) anyway. Oh but I understand, something in life are just too hard to give up right? Give me a break...

Ever hear of the Boston Tea Party?

I do not see any difference.

As a smoker for 25 years, I will tell you that raising the price will not make even a little dent in people quitting. Sure, some will. But the majority will still buy their cigarettes, and smoke just about as often as ever. The reason? IT IS AN ADDICTION. It is not a personal luxury that you just decide to stop doing because it's too expensive. A person has to WANT to quit, or it ain't gonna happen. The price could be raised to upwards of $8 a pack, but if I want to buy cigarettes, I'll just skip the milk, cookies, chips...whatever... at the store for the week's groceries. I will go without something else to make that $$ up. As sad and pathetic as that is, it is still the honest to God truth. And another thing: ever since a few years back (this is in NYS) when the price was dramatically raised, there was talk that people, in hoards, would quit. Well, guess what? The makers of Marlboro just keep coming out with buy/one, get/one deals. I usually always get two packs of Marbs for $6.15 total. Pretty darn cheap, considering they're supposed to be so expensive. And as long as the prices keep rising, the promotions will continue. Now excuse me while I go have a cigarette.

Well Big B rother did it to us again!  I want to know why they don't tax beer and vodka like they do cigs?  Oh yeah because all the politicans drink. I think they should triple tax the drinking industry!  What if all the smokers quit where would they get all there money then.  Oh yeah for you whiney baby non-smoker shut up finally!

so once again the smokers have to bail out the country  just let anyone give ME a hard time about my smoking

The common sense price will need to kick in for this to work. People with no sense don't care how much they are paying for cigarettes. They will complain but they will continue to kill themselves, others, and feed the pockets of the wealthy. Congratulations to those who smoke....

Jesse:

There was a law proposed in my county regarding texting while driving. Guess what? The politicians here voted it down because several of them thought that texting was "fun." Even though texting and alcohol are in no way related, the basis of the proposed laws being discussed are the same, and your are correct in your assumption. The alcohol thing hits too close to home.

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