JTI joins BAT in cigarette price hike

PETALING JAYA: JT International Bhd (JTI), the manufacturer of cigarette brands Mevius, Winston, Salem and Camel in Malaysia, has joined British American Tobacco (Malaysia) Bhd (BAT) in raising the prices of its cigarettes by RM1.00 per 20-stick pack from today.
The price revision follows BAT raising its selling price by the same quantum on Monday rising cost environment.
In a statement yesterday, JTI said the price for a 20-stick pack of Mevius and Salem cigarettes will now cost RM13.
Its Winston range cigarettes would be priced at RM11.50 per pack, while Camel's at RM12 per pack for filter and RM13.50 per pack for non-filter.
"It has become necessary to increase our prices, in view of the rising cost of doing business and the continued downtrend in legal volumes," said JTI Malaysia managing director Robert Stanworth in the statement.
Analysts are expecting Philip Morris International Inc (PMI) to follow suit over the next few days.
They also see the higher price giving rise to a stronger incidence of illicit trades, where the retail price is more than 50% lower, as well as value for money (VFM) smokers down-trading to cheaper cigarettes given their sensitivity to price movements.
RHB Research in a recent report said after the price hike, it expects BAT's sales volume to plunge further.
"However, we believe the 8.3%-9.5% price increases may more than offset the lower volume as well as the higher cost of production and distribution," it said.
"Meanwhile, we believe that the impact of the price hike amid the Royal Malaysian Customs Department's ongoing 'Ops Outlet' and unchanged prices of non-BAT cigarette brands on the growth of illicit whites should be minimal," it said.