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    R.J. Reynolds to Raise Some Prices, Reduce Discounts

    Announcement comes three days after Philip Morris's increases.

    WINSTON-SALEM, N.C. -- R.J. Reynolds Tobacco is increasing list prices on certain brands and reducing retail discounts on others, according to the Associated Press.

    RJR, a subsidiary of Reynolds American Inc., said its actions are a result of higher costs due to the recent federal enactment of tobacco buyout legislation and increased obligations under its Master Settlement Agreement (MSA) with the states.

    Reynolds American spokesman Seth Moskowitz said the list price on RJR's biggest brands, such as Camel, Kool, Winston, Salem, Doral and Pall Mall would not change. But the company is reducing the discounts on those brands by an average of $1 per carton or 10 cents per pack.

    The company will increase list prices on brands such as unfiltered Camels, Barclay, Lucky Strike and Carlton by $3 per thousand, or about 6 cents per pack, Moskowitz said.
    For discount brands, the cigarette-maker said it will raise prices by $5 per thousand, or 10 cents per pack, for its Monarch, Best Value and GPC brands.

    The company said in a statement that it estimates total expenses associated with the MSA and the tobacco buyout will exceed $2.8 billion next year. The buyout is being funded by assessments on major tobacco companies.

    On Friday, Philip Morris USA, the industry leader, cut wholesale discounts on its Marlboro cigarettes and three other brands, effectively raising prices for the first time in more than two and a half years.

    Also, Philip Morris announced plans to introduce two shorter Marlboros to appeal to people who want a quicker smoke. Marlboro Reds and Lights that are a half-inch shorter than the regular versions will be shipped starting Jan. 17, according to promotional materials obtained from a distributor.

    The cigarettes, which will join the shorter menthol version introduced in February, are aimed at consumers who step outside to light up because of smoking bans in offices and restaurants.

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