About 20 years ago, KKR fought hard to win the biggest buyout in history (at the time) – that is, the $25 billion purchase of RJR Nabisco. It was a crazy deal that ultimately turned into a best-selling book, Barbarians at the Gate: The Fall of RJR Nabisco
Unfortunately, the RJR transaction turned out to be a dud. Actually, the company nearly went into bankruptcy. For the most part, the company had too much debt, which was a dangerous thing as the economy slowed down.
It was a tough lesson but KKR went on to post strong returns on subsequent deals. Right?
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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
Tobacco to fall under FDA control?
The Family Smoking Prevention and Tobacco Control Act, to be voted on today by the Senate Health Committee, seems on the fast track to approval. If passed into law it will place the tobacco industry under the oversight of the Food and Drug Administration. The measure, supported by health groups and some of the industry, will give the agency some broad powers in regulating the contents and sales of tobacco products.
Industry heavyweight Altria Group's (NYSE: MO) Phillip Morris favors the bill, but others such as Reynolds American's (NYSE: RAI) R.J. Reynolds oppose it, claiming the regulations would limit its ability to compete with the market leader.
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