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Tag: Bonnie Herzog

  • Altria Raises Cigarette Prices Across Most Brands

    Altria Raises Cigarette Prices Across Most Brands

    Altria increased prices across its portfolio earlier this week, including a roughly 20- to 25-cent per pack hike on Marlboro, 25 cents on Benson & Hedges, Merit, Parliament, and Virginia Slims, and a 20-cent increase on L&M cigarettes, according to a notice from Goldman Sachs. The company held pricing flat on its value-focused Basic brand. The price changes were the second increase this year, according to CSP.

    Goldman Sachs Managing Director Bonnie Herzog said the increases were unsurprising and followed Altria’s “typical quarterly cadence,” but that the increases were sharper than predicted. “We believe Altria’s sophisticated and targeted pricing strategies, as well as promotional spending, should help to offset the frequency of list price increases, especially for price-sensitive consumers,” Herzog said.

    Herzog also said she expected British American Tobacco to follow soon with a similar price increase on cigarettes, and that she would be watching to see whether deep-discount cigarette manufacturers also move on price. “If they don’t, the relative price gap could widen further,” Herzog was quoted by CSP, increasing the risk of downtrading, but Herzog said brands like Marlboro, with a loyal customer base, would likely be able to keep consumers within the franchise.

  • Herzog Talks Industry Shifts, Expects Market to Hit $67B by 2035

    Herzog Talks Industry Shifts, Expects Market to Hit $67B by 2035

    Goldman Sachs Managing Director Bonnie Herzog described the U.S. nicotine market as “attractive and growing,” projecting total revenues to reach about $67 billion by 2035 as the profit pool shifts decisively toward smoke-free products. Speaking last week at CSP’s Convenience Retailing University, she said cigarettes, which currently generate about 70% of industry operating profit, are expected to fall to roughly 50% by 2035, with smoke-free categories becoming the primary engine of profit growth due to stronger unit economics. Smoke-free products already account for about 48% of U.S. nicotine volumes, a figure she expects to rise to around 75% over the next decade, driven by downtrading and cross-category movement.

    On e-vapor, Herzog said illicit products represent roughly 70% of the market today, a dynamic she said is suppressing growth in the formal channel and weighing on retailer sentiment amid limited enforcement. While she expects illicit penetration to decline over time, she cautioned that vapor will likely underperform other reduced-risk categories until enforcement improves, adding that British American Tobacco is positioned to remain the largest branded player.

    In modern oral, Herzog forecast nicotine pouches to reach nearly $11 billion in revenue by 2035 and become the second-largest category by volume behind e-vapor. She highlighted continued momentum for Zyn from Philip Morris International, citing retailer survey data showing strong fourth-quarter gains supported by promotions, and described Velo Plus from Reynolds American Inc. as a “fierce” competitor in the expanding pouch segment.