Honing in on the vaping trend
British American Tobacco (BAT), which owns brands including Dunhill, Lucky Strike and Kent, recently reported revenue growth of 10.2% in the first nine months of the year to end September. The volumes of cigarettes sold increased in a number of markets, notably Ukraine, Bangladesh, Russia, Vietnam and Turkey. It reported declines in Pakistan, Brazil and Venezuela. Overall, volumes were up 2.2% to 497bn cigarettes over the period.
The group is aiming to become the largest listed tobacco business with the takeover of Reynolds American, currently the second-largest cigarette seller in the US. BAT already owns a 42% stake in Reynolds, and is widely expected to increase its initial $47bn buyout offer for the remainder of the business in order to gain board approval for the deal. The transaction would give BAT a strong foothold in the US and access to Reynolds’ leading e-cigarette position, Bloomberg reported.
BAT has been investing aggressively in alternative tobacco products, and launched a new e-cigarette, named the Vype Pebble, on 1 December with a retail store in Milan. The tobacco group believes the Pebble, which is brightly coloured and ergonomically shaped, fills a gap in the market as e-cigarettes, which have fewer negative health effects, are currently either shaped like traditional cigarettes or are bulky with “tanks” that can be refilled, Reuters reported. BAT has spent about $700m over the past five years to develop its alternative tobacco products.
Over the past four years, sales of vapour devices grew by 59% to more than $6bn, with sales in the US more than doubling, according to data from Euromonitor International. How to trade it: As BAT fell to previous lows from October, the three-day relative strength index (RSI) formed higher bottoms – a sign of gradual investor interest. However, BAT would have to trade above 79 400c/share to escape its bear trend and retest highs at 94 100c/ share. Investors could reload above 89 500c/share but should maintain a tight stop-loss at first, and keep it trailing. Do not go long if BAT reverses below 74 400c/share – the bear trend would then remain intact.
Over the past four 59%years, sales of vapour devices grew by 59% to more than $6bn, with sales in the US more than doubling.
A promoter shows British American Tobacco’s new tobacco heating system device ‘glo’ and a packet of Kent tobacco.