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British American Tobacco takes a hit on vapes after US health backlash

Michael Bow
PA

Lucky Strike owner British American Tobacco lowered growth forecasts at its prized vapes and heating tobacco division on Wednesday because of a US backlash against vaping.

The smoking giant, which like most Big Tobacco has banked on e-cigarettes to propel future growth, said sales would grow at the lower end of a 30% to 50% range for 2019.

It predicted growth of around 40% when it reported in August.

BATs owns the Vuse and Vype vaping brands and also makes tobacco heating sticks Glo and Neo. Vype accounts for about 12% of the UK vaping market, while Vuse is its popular US brand with 18% market share.

Vaping, once a cool youth trend and aid for quitting smokers, has started to lose favour in the US after figures showed the ill-health effects.

Around 2000 cases of vaping-related illnesses and at least 45 deaths have been recorded by the Centers for Disease Control and Prevention, with many linked to cannabis-related products.

President Donald Trump has also threatened to crack down on flavoured e-cigarettes to put child vapers off while New York has banned flavoured e-cigarettes and liquids.

The vaping backlash hit Juul owner and BATs rival Altria in October when it took a $4.5 billion (£3.5 billion) writedown on the brand and valued it at $24 billion. It bought the company for $38 billion.

Traditional cigarettes helped cushion BATs from the vaping hit, with strong sales of Natural American Spirit and Newport cigarettes in the US.

Full-year sales growth across the group is forecast to be in the upper half of a 3% to 5% range and operating profits are expected to be in the upper half of 5% to 7%.

The market liked the update and sent the shares up 2% to 3043p.