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Lorillard CEO Discusses FDA Menthol Study

GREENSBORO, N.C. -- In a conference call with analysts regarding fourth-quarter earnings, Martin Orlowsky, CEO of Lorillard Inc., the nation's third-largest cigarette company and maker of the top menthol cigarette brand, Newport, discussed an upcoming review of menthol by the U.S. Food and Drug Administration's Tobacco Products Scientific Advisory Committee, which is planning to consider claims that products like menthol cigarettes have greater public health impacts, including among children and certain ethnic groups, The Associated Press reported.

"We believe the weight of the scientific evidence does not support a conclusion that menthol cigarettes convert greater health risk than non-menthol cigarettes. We also believe that the scientific advisory committee will indeed form its conclusions and recommendations based on the scientific evidence before it. We therefore continue to believe that the scientific advisory committee will not make a recommendation to the FDA that it ban menthol," he said. "We believe that a ban on menthol would lead to a massive black market for contraband mentholated cigarettes and encourage the entry of totally unregulated products into the marketplace that would not meet even the basic standards for product integrity and quality."

While analysts believe a ban on menthol is unlikely, the FDA could take some action against it, such as warning labels or reducing the amount of menthol in products, according to the report.

Also during the call, Lorillard said it will enter the moist smokeless tobacco product market. Lorillard didn't provide details of the new moist smokeless tobacco product, but said that an existing joint venture with Swedish Match to develop a new "snus" tobacco product for the U.S. had been mutually terminated, The Wall Street Journal reported.

In 2006 Lorillard entered into a joint venture with Swedish Match North America to develop and study of Triumph Snus. During the call, Lorillard said the snus product didn't make gains in the test markets in the U.S., and that it may not have been the right time for the product in North America, according to the report.

Lorillard appears to be betting that Americans will continue to prefer more traditional products such as moist smokeless tobacco, the report stated.

Swedish Match sells its flagship snus brand, General, as well as the Catch brand in the U.S. Swedish Match will also continue selling in the U.S. its moist smokeless tobacco products such as Red Man and Timberwolf.

"We remain committed to the U.S. market," Lars Dahlgren, chief executive of Swedish Match, said in an e-mail statement to the Journal. The company said the dissolution of the Lorillard joint venture has no bearing on its snus joint venture company with Philip Morris International Inc., which distributes snus products outside of the U.S. and Scandinavia.

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