Tobacco Giants to Raise Cigarette Prices

The nation’s two biggest U.S. tobacco companies raised wholesale cigarette prices by 14 cents a pack for the second time in just over four months. The moves could boost the retail price of a pack of Marlboros, Camels and other brands by even more as retailers set the price that smokers pay at the checkout register. Philip Morris Cos. said it notified wholesalers that it was boosting the price it charges them by $7 per 1,000 cigarettes, effective today. No. 2 R.J. Reynolds Tobacco Holdings Inc. quickly followed suit. Analysts expect Brown & Williamson Tobacco Corp. and Loews Corp.’s Lorillard Tobacco, the third- and fourth-largest U.S. tobacco companies, to match the increases. Philip Morris led three industrywide price increases in 2000, which helped cigarette makers pay tobacco settlement costs and boost profits. Most of the price increases will be used to offset Philip Morris’ tobacco settlement payments. Meanwhile, tobacco stocks got a boost on news that Justice Department lawyers have warned they may soon be forced to abandon the federal government’s landmark lawsuit against the tobacco industry because the Bush administration hasn’t proposed enough funding to keep litigation going. Shares of New York-based Philip Morris rose $2.75 to close at $50.70, while R.J. Reynolds shares rose $2.61 to close at $57.86 on the New York Stock Exchange.