CHICAGO, Feb 5 (Reuters) - Philip Morris USA is raising prices on Marlboro and other cigarettes by about 9 cents per pack next week, with some of its smaller brands getting an 18-cent-per-pack increase, the company said on Thursday.
Philip Morris USA, the largest U.S. cigarette maker, said it told trade partners about the plan on Wednesday. The new list prices go into effect on Feb. 9.
The company, which is owned by Altria Group Inc (MO.N), said the increases stem from its periodic evaluation of its pricing strategies.
Goldman Sachs analyst Judy Hong called the increases “relatively modest” and said she expects a larger increase to come in the future due to the anticipated 61-cent federal excise tax increase in April.
On Wednesday, President Barack Obama signed a law expanding a health program to include 3.5 million uninsured children. The expansion is being paid for by raising the federal tax on cigarettes to $1 per pack from the current 39 cent-per-pack tax. Taxes on cigars and other tobacco products will also rise.
Philip Morris USA is raising list prices by 90 cents per carton, or 9 cents per pack, on Marlboro and other brands such as Basic, Parliament and Virginia Slims.
It is raising the price of brands such as Benson & Hedges, Chesterfield, Lark and Merit by $1.80 per carton, or 18 cents per pack.
Hong, who has a “neutral” view on Altria and the tobacco sector, said she expects Reynolds American Inc RAI.N and Lorillard Inc LO.N to follow with similar price adjustments.
Shares of Altria were down 5 cents at $16.70 in morning trading.
Reporting by Jessica Wohl, editing by Dave Zimmerman