British American Tobacco cites illicit vapes for slower US sales
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Cigarette volumes in the US plunged 10.1 per cent, BAT said, blaming a downturn in consumer spending and an increase in the discount category.
PHOTO: AFP
WASHINGTON – British American Tobacco (BAT) growth in smoke-free products was dragged down by the prevalence of illicit vapes in the US market, pushing the cigarette maker to provide disappointing guidance for 2025.
The maker of Dunhill and Lucky Strike smokes said that sales of vapes in the US fell 0.8 per cent in 2024, with price increases failing to make up for a slump in volumes, in a sign that competition from unauthorised manufacturers is eroding its market share.
Cigarette volumes in the US plunged 10.1 per cent, BAT said, blaming a downturn in consumer spending and an increase in the discount category, where the company does not operate.
BAT shares tumbled as much as 9 per cent in London, the biggest intraday decline in more than a year, but remain up 7 per cent since the start of the year.
Guidance for revenue growth of about 1 per cent for 2025, partly because of increased excise and VAT in Bangladesh and new tobacco regulations in Australia, disappointed analysts. BAT also forecast growth in adjusted operating profit of 1.5 per cent to 2.5 per cent.
“It will be another year without much to show in profit terms,” wrote Panmure Liberum analyst Rae Maile in a note.
“We all understand the situation is unsustainable in the US on the vapour side,” said chief executive Tadeu Marroco on a call with reporters, adding that the illicit vapes mean that users have no control over the specifics of what they are consuming. “Hopefully the new administration will bring a new way to think about enforcement.”
BAT, which said performance in 2025 would be stronger in the second half, also launched a £900 million (S$1.5 billion) share buyback. BLOOMBERG
