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Thursday, October 24, 2002

Premium cigarette brands lose customers as prices rise

A Wall Street Journal story (subscription required) that details the changing face of the tobacco industry and cigarette sales:

Rising prices caused more smokers to quit. The number of cigarettes smoked in the U.S. has been declining by 1% to 2% a year for decades. The sharp price increase immediately after the state settlements caused consumption to fall by about 7% in 1999.

The price increases also encouraged more-frugal smokers to switch brands. Some began moving from Basic and other discount cigarettes made by the big companies to even less expensive varieties made by a new group of upstarts.

...By late spring, the most profitable premium brands, which for the most part had held steady since the state settlements, began to stumble. In last year's third quarter, about 73.4% of cigarettes sold in the U.S. were premium brands such as Marlboro and Camel. That dropped to about 71.7% in the third quarter of this year. One percent of the U.S. cigarette market is equivalent to about 200 million packs a year.

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