Citigroup (NYSE:C) Downgrades Philip Morris (NYSE:PM), British American (AMEX:BTI), Imperial (LSE:IMT)

Citigroup (NYSE:C) cut their outlook on the tobacco industry today, downgrading Philip Morris (NYSE:PM), British American Tobacco (AMEX:BTI) and Imperial Tobacco (LSE:IMT).

The move by Citigroup was prompted by the need for tobacco companies to slash prices because of slowing sales around the world.

Another factor was the huge tax increases to be implemented in Japan, Russia and Spain. That is expected to eventually spread to other countries as well, although it'll take some time.

Also noted by Citigroup was the generic packaging instituted in Australia and Europe and the effect that will have on the tobacco industry.

All three companies mentioned above were downgraded from "Buy" to "Hold" by Citigroup.

British American Tobacco was trading at $$75.68, down $1.27, or 1.65 percent. Philip Morris was trading at $56.26, down $1.46, or 2.55 percent. Imperial Tobacco was trading in London at 1,982, down 37.00, or 1.83 percent.