Lorillard Inc. has initiated a price increase on its cigarette brands, as stated in a research note released by Bonnie Herzog. “Lorillard performed a price hike by five cents a pack on its Newport Menthol brand, 11 cents a pack on its Newport Non-Menthol brand and eight cents a pack on its other cigarette brands, but left the price of Maverick brand unchanged,” Wells Fargo Securities LLC senior director on alcohol, tobacco and consumer research confirmed. She also said that overall the current price increase is positive, as it indicates the pricing power of the company and the industry as a whole. Taking into account the constantly declining cigarette consumption, proper pricing strategy is essential in order to support top-line growth.

In her research note, Wells Fargo Director admitted she believes that both Philip Morris USA (owned by Altria Group Inc.) that makes Marlboro and Virginia Slims and RJ Reynolds Tobacco Co. (owned by Reynolds American Inc.) that makes Camel and Pall Mall would follow Lorillard steps, increasing prices on key brands in the next couple of days. Philip Morris USA usually makes such announcements on Wednesdays. Given that both leading tobacco companies will increase their prices, Wells Fargo expects gap between premium brands and discount brands to grow slightly (to approximately 33% to 34%) up from its actual level of 30% to 32% after the price hike on low-cost and mid-value brands carried out by Commonwealth Brands and Liggett last month.

Lorillard increased the prices on majority of its leading cigarette brands last November. The company increased the price of Newport Menthol, True and Kent brands by six cents per pack (or 60 cents per carton). But the prices on Old Gold and Maverick cigarette brands as well as Newport Non-menthol were not changed.

Lorillard’s major rivals followed its steps then.

Murray Kessler, Chief Executive Officer at Lorillard, declared during the annual meeting of the shareholders and industry experts that the company will focus on its current brand range, since the company main success is associated with its one-brand-oriented marketing strategy. In addition, Lorillard’s CEO said that would keep promoting its Newport non-menthol brand and consider its options in other segments of tobacco market.

Lorillard Inc., by means of its subsidiary Lorillard Tobacco Co. is the number three cigarette maker across the United States. Established in 1760, Lorillard is the oldest operating tobacco firm in the country. Newport, the company’s flagship cigarette brand, is the best-selling menthol-flavored cigarette across the nation and second top-selling cigarette overall, behind Marlboro. Besides Newport, Lorillard also markets Kent, Maverick Old Gold and True brands. These five brand families comprise 43 products which differ in price, flavor, strength and length. The company is based in Greensboro, N.C. where its headquarters and manufacturing unit are located.

By Clark Moore, Staff Writer Copyright © 2011 Hot-Cigs.com All rights reserved.