British American Tobacco sees growth despite slowdown in US vaping market
Cigarette maker is sticking to its revenue growth guidance, even as US officials crack down on vaping
, the world’s second-largest cigarette maker, on Wednesday maintained an upbeat outlook for 2019 in spite of a slowdown in the US market, where the government has begun to crack down on e-cigarettes following a number of vaping-related deaths.
London-listed BAT said it expected to achieve constant currency adjusted revenue growth in the upper half of the 3-5 per cent long term guidance range for the full year, while achieving growth for its “new category” business at the lower end of its 30-50 per cent range, because of the slowdown in the US vape market.
“We expect to deliver a strong performance in 2019, building on the good progress we made in the first half,” said BAT chief executive Jack Bowles. “Increased investment and new product launches are delivering good revenue growth, despite the recent slowdown in the US vapour market.”
Reuters reported on November 19 that the American Medical Association (AMA) had called for a total ban on all e-cigarette and vaping products that are not approved by the US Food and Drug Administration as smoking cessation tools.
Some 2,000 people have been sickened and at least 42 have died from vaping-related lung injuries, according to US health officials, who have expressed concern about the uncertainty over the long-term health effects of vaping and e-cigarettes.
BAT said it expected no change to its full-year expectations for 2019 for its US market volumes, which it estimates will fall by around 5.5 per cent, or for 2020.
“We believe that the issues around vaping in the US should lead to a better and stronger regulatory environment in which we are well placed to succeed. In summary, we are delivering on our priorities, Mr Bowles said.
The environment in the United States market is growing more challenging. BAT rival Juul Labs is being sued by the state of California on the grounds that the advertising for its vaping products specifically targets young people and fails to issue any warnings about the potential health risks.
Juul suspended sales of its fruit-flavoured products last month, ahead of a proposed ban to remove all flavoured e-cigarettes from the market. New York has become the first city to ban them [LINK TO RAMLA’S STORY FROM TODAY].
BAT shares were trading up by around 2 per cent mid-morning in London at around £30.49 a share, near two-month highs.
FURTHER READING: New York bans flavoured e-cigarettes
FURTHER READING: Vaping deaths: What does this mean for the e-cigarette industry?