Yahoo Finance FTSE 100: British American Tobacco making millions from vaping
As smoking has declined the company has refocused efforts in next generation products
British American Tobacco (BATS.L) said it had benefitted from a rise in numbers of vapers, as it reported half-year results on Wednesday, with consumers of noncombustible products up by 1.5m, versus the full-year for 2022.
"We are now close to breakeven," said Tadeu Marroco CEO. Revenue from non-combustibles is now 16.6% of group revenue.
"While it’s encouraging to see continued good performance in Vapour and Modern Oral, we recognise more work is required in heated tobacco," he said.
BAT reported its half-year profit at £5.94bn and full-year guidance remained unchanged.
As smoking has declined, the company has refocused efforts in next generation products in order to sustain its growth. That, alongside price hikes for cigarettes helped support results.
While some segments appeared to be on the up, sales in the US remain depressed. For the six months to 30 June 2023, the US dragged down cigarette volume by 12.4%, compared to overall 5.7%, the results showed.
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The news comes amid rising anxiety about the numbers of vapers, as health and environmental concerns are put in the spotlight.
Single use vapes have surged in popularity over recent months, driven by Chinese brands such as Elfbar and Lost Mary.
Earlier this month the Local Government Association urged action on disposable vapes, saying that 1.3m are thrown away each week. The group wants them banned by 2024.
Nicotine campaign group Action on Smoking and Health released a report in June that found in 2023, 20.5% of children had tried vaping, up from 15.8% in 2022 and 13.9% in 2020 before the first COVID lockdown. The majority had only vaped once or twice (11.6%), while 7.6% were currently vaping (3.9% less than once a week, 3.6% more than once a week) and the remainder (1.3% in 2023) saying they no longer vape.
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