CALIFORNIA : BRIEFLY / TOBACCO : Cigarette Makers Raise Prices 18 Cents a Pack - Los Angeles Times
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CALIFORNIA : BRIEFLY / TOBACCO : Cigarette Makers Raise Prices 18 Cents a Pack

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Associated Press

Leading cigarette manufacturers raised wholesale prices 18 cents a pack, or 11%, anticipating an upcoming excise tax increase and higher costs stemming from their $206-billion settlement with states over health-care costs. The move, likely to boost retail prices by about 22 cents a pack, will be seen immediately in some outlets, analysts said. Philip Morris Cos., the world’s biggest tobacco company, confirmed that it raised prices Friday. Representatives of R.J. Reynolds Tobacco Holdings Inc. and Brown & Williamson Tobacco Corp., a unit of British American Tobacco, confirmed that they matched the increase. All three declined to comment further. The price hike, the second-largest ever, was expected but came earlier than some analysts had predicted. The industry now faces further cost increases, including a 10-cent increase in the federal excise tax set for Jan. 1, and an increase in settlement expenses from 46 cents per pack to 50 cents, said Morgan Stanley Dean Witter analyst David Adelman. The hike will have a significant impact on demand but will boost overall revenue and profits, Adelman said. Philip Morris closed up 19 cents at $37.75, while Reynolds lost 13 cents to close at $28, both on the New York Stock Exchange. BAT’s American depositary receipts closed unchanged at $17.56 on the American Stock Exchange.

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