By Timothy S. Donahue
Top Takeaways:
Price move: Altria Group raised Marlboro by 20–25 cents per pack in its second hike this year.
Strategy shift: Premium brands rise while the value brand Basic stays flat to retain price-sensitive smokers.
Industry signal: Analysts expect British American Tobacco to follow suit with similar increases.
Cigarette volumes are falling, but prices keep climbing. Altria Group and its subsidiary, Philip Morris USA, have rolled out another round of price increases across their cigarette portfolio, raising the price of the flagship brand Marlboro by roughly 20 to 25 cents per pack.
The move, which took effect Sunday, also includes 20-cent increases for L&M and 25-cent hikes for brands such as Benson & Hedges, Merit, Parliament and Virginia Slims, according to Goldman Sachs analyst notes.
Notably, Altria kept pricing flat on its Basic brand, a clear signal that the company is continuing to segment its strategy—raising prices at the top while protecting its entry-level offering.
The increase follows what analysts call Altria’s “typical quarterly cadence,” though the magnitude is slightly higher than in recent moves.
“The increase is a bit sharper than prior increases, likely given the ongoing pressures on cigarette volumes,” said Goldman Sachs Managing Director Bonnie Herzog.
That pressure is widely understood across the industry. As smoking rates decline, cigarette manufacturers have increasingly relied on pricing power to offset declining volumes, particularly among premium brands where loyalty remains strong.
Herzog said Altria’s approach—combining price increases with targeted promotions—should help retain consumers even as costs rise. “We believe Altria’s sophisticated and targeted pricing strategies… should help to offset the frequency of list price increases, especially for price-sensitive consumers,” she said.
The next move may not be far behind. Herzog expects British American Tobacco—through its U.S. subsidiary Reynolds American—to follow with a similar round of price increases, a common pattern in the highly concentrated U.S. cigarette market.
One key variable: the discount segment. If lower-priced manufacturers don’t raise prices in concert, the gap between premium and discount brands could widen, increasing the risk of downtrading.
Still, premium brands such as Marlboro are expected to hold their ground. “Brands with a loyal customer base and strong promotions should be able to keep those consumers within the franchise,” Herzog said.
