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Home » Recent CSD Articles » Categories » Today's News » Wells Fargo Anticipates Cigarette Price Increase Wells Fargo Anticipates Cigarette Price Increase Could the next cigarette price increase appear this September? Convenience store retailers should expect the next cigarette price increase to arrive sooner than the normal November cycle, according to a report by Wells Fargo Securities LLC. Wells Fargo conducted a survey of its tobacco retailer and wholesaler contacts representing approximately 60,000 U.S. convenience stores to gauge expectations for the next round of cigarette pricing increases. Bonnie Herzog, managing director – equity research, beverage, household & personal care, tobacco & c-stores for Wells Fargo noted, “According to our contacts, the next cigarette list price increase is expected to be led by PM USA during the week of Sept 18 at $0.08/pack (+2-3%). We agree as we don’t expect manufacturers to wait till the normal November cycle to take a price increase, especially given the severity of volume declines in Q2,” which were related to the outsized impact of California’s $2-per pack increase in excise tax. “As has been the case in past tax cycles, we expect the industry to further mitigate California tax-driven volume declines with list price increases, partially offset by stronger promo efforts. Longer term, we see further downside to combustible cigarette volumes if the U.S. Food and Drug Administration succeeds with its new nicotine mandate.
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However, the U.S. Court of Appeals for the District of Columbia Circuit also ruled that the statements cannot include the phrase that Kessler required: “Here is the truth.” The court’s order requires that the companies publish five statements related to cigarette smoking across several communication channels, including on their websites and on cigarette packs for at least a year. The statement will cover these categories: Lack of significant health benefit from smoking “low tar,” “light,” “ultra light,” “mild” and “natural’ cigarettes. Manipulation of cigarette design and composition to ensure optimum nicotine delivery. Adverse health effect of exposure to secondhand smoke. “This industry has changed dramatically over the last 20 years, including becoming regulated by the FDA, which we supported,” Murray Garnick, the general counsel for Philip Morris USA’s parent company Altria Group Inc., said in a statement. “We’re focused on the future and, with FDA in place, working to develop less-risky tobacco products.” The newspaper ads with the corrective statements will appear in the front section of the Sunday edition on five different dates: Nov. 26, Dec. 10, Jan. 7, Feb.