BAT revenue warning as vaping hit by virus
CIGARETTE giant British American Tobacco has warned that it could take two years longer than expected to reach a major milestone in the business unit which includes its vape pens.
It also warned that revenue from its overall business is likely to miss expectations.
Covid-19 has slowed the growth of vaping products, which are touted as the big saviour in western countries for under-pressure tobacco companies.
BAT said that it could now take until 2025 before it starts making £5billion in revenue from its new categories business unit, which includes vape pen Vype.
“Covid-19 has disrupted consumer activation plans, reducing overall industry growth rates in new categories,” BAT told shareholders yesterday.
“It has also led to the scaling back or postponement of some launches, as well as causing supply disruption and out-of-stocks earlier in the year. While the vapour category continues to recover following the global slowdown in the second half last year, the US market remains below historical levels.”
BAT had originally hoped the segment could reach revenue of £5billion in the 2023-24 financial year. The new categories unit’s products include oral tobacco and heated tobacco products.
It follows a turbulent time for the vaping industry. Not only have the tobacco giants who are betting on it had to deal with the pandemic, they are also being increasingly scrutinised by regulators.
Vapes had been riding high until reports started linking them to lung damage, and even death, among young people.
It led to a ban on many flavours of the devices in several US states.
BAT now expects revenue to grow between 1 per cent and 3 per cent, down from previous expectations of between 3 per cent and 5 per cent.