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

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.