[THE INVESTOR] British American Tobacco is likely to increase the consumer price of its heat-not-burn cigarettes from 4,300 won (US$4.01) to 4,500 won, on par with its competitors here, according to industry sources on Jan. 10.
The issue of tobacco producers raising the price of their HNB cigarettes arose last year, when the government announced plans to increase individual consumption taxes and other levies such as a health promotion fee. At the time, Phillip Morris International reportedly said that the company was considering raising its HEETS stick’s price up to 5,000 won from 4,300 won per pack.
The government recently increased the taxes from 1,739 won to 2986 won. PMI, however, decided to raise the price of its brand to 4,500 in December. Source said that the decision was mainly to stay as the leader in the local HNB market. According to industry sources, PMI’s market share has already passed 2.5 percent in Korea since its launch in June last year. Korean cigarette maker KT&G also on Jan. 9 raised the price of its Fiit brand from 4,300 won to 4,500 won.
Sources say that BAT will also soon raise its price of Neostik, a tobacco product exclusively designed for its HNB device Glo, to reflect the taxes. Industry watchers expect the new price to be the same as competitors.
The company, however, said that a decision has not yet been made. “Our competitors’ price will also be considered during our discussions. Details concerning the date and range of the price hike have not been decided yet,” a BAT official told The Investor.
Moreover, some industry watcher say that HNB prices are bound to increase further since the raised amount does not wholly reflect the hiked taxes.
Nevertheless, PMI and KT&G both said they do not have any plans of a further increase at the moment. PMI especially emphasized that the company has already decided to cut costs of importing HEETS sticks by expanding its manufacturing facility instead of raising prices.
By Song Seung-hyun (email@example.com)