By Saabira Chaudhuri
British American Tobacco PLC plans to challenge possible restrictions on menthol cigarettes in the U.S. and argue that a ban in Canada hasn't reduced smoking rates, in the company's fight to convince regulators to allow its Newport brand to remain on the market.
The U.S. Food and Drug Administration is seeking a nationwide ban on menthols in its effort to curb teen smoking, an action that would remove nearly a third of the roughly 250 billion cigarettes sold each year in America.
Such a ban, if implemented, would be a big blow to BAT, which in 2017 spent about $50 billion to take full control of Reynolds American and push deeper into the U.S. market. Menthols account for more than half of BAT's U.S. cigarette volume.
Chief Executive Nicandro Durante said in an interview that BAT will counter calls for a ban by saying there are no scientific studies showing that menthols cause more young people to smoke or fuel additional demand.
He also said BAT would highlight research on the unintended consequences of banning menthols and the industry's experience in Canada after the government banned the product in 2017.
"The retention of consumers was 100%. People kept smoking," Mr. Durante said. "This is one of the examples I plan to use."
Health Canada didn't immediately respond to a request for comment. The regulator has said that by making tobacco smoke easier to inhale, menthols make smoking more palatable for young people.
The FDA concluded in 2013 that menthols are more addictive and likely pose a greater health risk than regular cigarettes, but the agency has talked about a potential ban only in recent years. The agency says menthol-flavored cigarettes likely ease the way for new, young smokers, possibly because menthols help reduce throat irritation caused by cigarette smoke.
Studies show that menthols are typically popular among younger smokers and African-Americans.
Mr. Durante said formal consideration of a ban could take between five and nine years given the FDA's scientific approach to regulation, which includes a period of public consultation.
If the FDA chooses to cap menthol content in cigarettes, Mr. Durante said, Newport would be at an advantage because it has the lowest level of menthol among similar cigarettes in the U.S.
London-based BAT on Thursday reported an 84% fall in net profit last year to GBP6.03 billion ($8.01 billion). The company, which also sells the Kent, Dunhill and Lucky Strike brands, attributed the sharp fall to currency headwinds and a year-earlier gain from its acquisition of Reynolds.
Adjusted organic operating profit, which strips out such factors, was up 4%, while revenue increased 25% to GBP24.49 billion.
BAT said it would take longer than previously telegraphed to achieve GBP5 billion in revenue from next-generation products. It said adoption of tobacco-heating products in Japan, like BAT's Glo and Philip Morris's IQOS, had cooled.
BAT said its Vuse e-cigarette brand had grown but lost share in the U.S. to Juul Lab Inc., the fast-growing e-cigarette maker that has recently attracted attention from regulators for appealing to youngsters.
Mr. Durante said the FDA needed to do more to crack down on access for youth vapers.
contributed to this article.
Write to Saabira Chaudhuri at email@example.com