Lorillard Shares Rise as Menthol Ban Seen Unlikely

Source from:  Reuters 03/21/2011

The FDA advisers, experts from outside the agency, concluded the availability of menthol cigarettes "increases initiation and reduces cessation," the report said. "Of particular concern was the high rate of menthol cigarette smoking among youth and the trend over the last decade of increasing menthol cigarette smoking among 12 to 17 year olds, even as smoking of non-menthol cigarettes declines," the report said. The issue is racially sensitive as blacks overwhelmingly favor menthol and suffer more from smoking-related illnesses and deaths than whites. Reynolds American Inc's R.J. Reynolds Tobacco Co and Altria Group Inc's Philip Morris also sell menthol cigarettes. Menthols account for nearly one-third of the $83 billion in annual U.S. cigarette sales, according to Euromonitor International data. The Newport brand accounts for about 85 percent of Lorillard's cigarette sales, including a non-menthol version that the company launched in the fourth quarter of 2010. Any curbs would be a severe blow to Lorillard, which objected to the panel's findings. "While we fundamentally disagree, we are not surprised by what we believe is (an) unsubstantiated conclusion relative to the impact of menthol cigarettes on public health," Lorillard Chief Executive Murray Kessler said in a statement. Lorillard expects that menthol cigarettes will ultimately not be removed from the market, "especially when contraband and other unintended consequences are seriously considered." Lorillard has filed a lawsuit to prevent the FDA from considering the panel's report in making any final decision on menthol cigarettes. A 2009 law banned chocolate, cherry, vanilla and other cigarette flavors, but exempted menthol. Instead, Congress called on the FDA and its advisers to examine the issue. Altria shares gained 1.5 percent to end at $24.80 and Reynolds shares rose 1.9 percent to $33.47, both on the NYSE. Enditem