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Flavored cigarettes off the shelves

As of Tuesday, you'll have to cross a border to buy a clove. The U.S. Food and Drug Administration's ban on flavored cigarettes went into effect and prohibits the sale of candy and fruit-flavored cigarettes. Authorized under the Family Smoking Prevention and Tobacco Control Act, the measure is intended to reduce the number of children who take up the habit.

Under the new ban, cigarettes that include "an artificial or natural flavor (other than menthol) or an herb or spice" cannot be sold in the United States. The long, but not exhaustive list of flavors, consists of strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry and coffee.

Continue reading Flavored cigarettes off the shelves

Options Update: Cigarette manufacturer's volatility low after price increases

Lorillard (NYSE: LO) closed at $57.35. LO, Altria Group (NYSE: MO), and Reynolds American (NYSE: RAI) have recently announced an increase in cigarette prices. LO April and June option implied volatility of 47 is below its 26-week average of 51, according to Track Data, suggesting decreasing price movement.

RAI closed at $33.54. RAI April and August option implied volatility of 37 near its 26-week average according to Track Data, suggesting non-directional price movement.

MO closed at $16.60. MO April and September option implied volatility of 35 is below its 26-week average of 40, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Harvard report says Menthol used to lure smokers into habit

A Harvard report was release this week that again is setting the tobacco world on fire. Well, at least figuratively. In the report, the compound Menthol was the focus, and it was concluded that by varying the amount of it in certain brands of cigarettes, tobacco companies could recruit and keep younger smokers and those who may have had an initial bad reaction to smoking upon starting the habit.

The strategy was to "lock in lifelong adult smokers," said the researchers at the Harvard School of Public Health. After all the past shenanigans that the tobacco industry has admitted to, it's not surprising to hear that using a varying chemical level strategy to recruit smokers and get them hooked was tried. It was found that milder cigarette brand with lower menthol levels were more appealing to younger smokers. hence, these products were marketed to that age group as a result, according to the report.

One particular example cited was the strategy Philip-Morris USA used when it introduced "Marlboro Milds" back in 2000. The product instantly became a hit with younger smokers was responsible for almost 80% of the menthol product category sales for the company that year.

Continue reading Harvard report says Menthol used to lure smokers into habit

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Last updated: November 12, 2009: 02:44 PM

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