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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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This is clearly in line with Article 16.3 of the Convention which states that: “Each Party shall endeavour to prohibit the sale of cigarettes individually or in small packets which increase the affordability of such products to minors.” Regretfully, it is observed in these past few weeks that there has been pressure on the Government to bring back the sale of kiddie packs to combat the increasing sale of illicit cigarettes. The adoption of this possible undesirable action is a clear violation of the FCTC Article 5.3 where public health policies on tobacco control are being challenged by entities of commercial and vested interest. NCWO is of the view that the Government should not be put under such pressure for the following reasons. 1. The evidence is staggering; tobacco kills one person every six seconds – that is, one in 10 deaths among adults worldwide – and accounts for 500 million deaths a year. By 2030, unless urgent action is taken, tobacco’s annual death toll will rise to more than eight million. WHO in its Global Tobacco Epidemic Report 2008 warns us that if current trends continue unchecked, tobacco could kill up to one billion people in this century. 2. Every day, 50 teenagers in Malaysia begin smoking. Of the 4.7 million smokers here, most started before the age of 18, with 25% before the age of 10.