Company executives said that the discount brands, some of which sell for under a dollar a pack, are the villains. Many consumers have shifted their allegiance away from brand names to generic cigarettes. In the past year Marlboro’s market share has fallen to 22 percent from 24 percent.
Will this spur a price war? “It depends on how aggressive Philip Morris becomes with Marlboro,” says Craig Silvers, a tobacco analyst at Crowell, Weedon & Co. in Los Angeles. “This could be something similar to the airline industry, where one competitor starts cutting, and others, to maintain market share, start cutting prices further.” But the cost reductions could be temporary. With the Clinton administration discussing a so-called “sin tax” on tobacco products, consumers may soon end up paying more than ever for their smokes.
