IW 50 Best: No. 1 Lorillard Wants Public to 'Understand' Menthol

July 1, 2010
The top IW 50 manufacturer launches campaign to counter health claims about menthol cigarettes.

Cigarette manufacturer Lorillard Inc. claims critics are blowing smoke when they say menthol cigarettes could pose a greater health risk than nonmenthol products.

The No. 1-ranked manufacturer on the IW 50 Best Manufacturing Companies list launched a website on June 28 called Understanding Menthol that supports the company's position on the issue with research and potential policy implications.

Stiff regulations or an outright ban on menthol cigarettes would have a significant impact on the Greensboro, N.C.-based manufacturer. Newport is Lorillard's top-selling brand and holds the largest menthol market share in the United States.

The share of smokers using menthol cigarettes increased to 34% in 2008 from 31% in 2004, according to the Substance Abuse and Mental Health Services Administration. Lorillard says on its Understanding Menthol website that menthol cigarette sales are in fact decreasing and notes that menthol accounts for about 30% of the cigarette market in the United States.

Lorillard partly attributed a 7% profit increase in 2009 to gains made by its Newport brand. In April the company said its first-quarter revenue rose to $1.4 billion, up from $917 million in the year-earlier period. Net income in the most-recent reporting period was $232 million, or $1.50 per share, compared with $184 million, or $1.09 per share, in the year-ago period.

Lorillard took this year's top IW 50 spot based on strong 2009 results in several performance categories, including revenue growth of 24.5%, return on equity of 150.2%, profit margin of 18.1% and a return on assets of 40.8%.

But to big tobacco's detractors, the company's success is based on products that can cause cancer and may exploit minorities. The FDA's Center for Tobacco Products conducted a web-based public meeting on June 30 to discuss developing a plan to enforce advertising restrictions on menthol and other cigarettes to youth, particularly those in minority communities.

The FDA is exploring claims that menthol masks the harshness of cigarettes, making it easier for young people to start smoking and that the minty-flavored smokes may be more difficult to quit than other types of cigarettes.

The level of menthol cigarette use among African-American smokers is 82.6%, much higher than the 23.8% of white smokers who purchase menthol products and 32.3% of Hispanic smokers, according to a study released in December 2009 by the Substance Abuse and Mental Health Services Administration.

Lorillard says scientific evidence doesn't show menthol cigarettes are any more harmful than other cigarettes.

"Menthol neither causes people to smoke, nor deters them from quitting," said William True, Lorillard's senior vice president of research and development, when announcing the Understanding Menthol website on June 28. "A menthol cigarette is just another cigarette, and it should be treated no differently. The best available scientific evidence demonstrates that menthol cigarettes have the same health effects as nonmenthol cigarettes."

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