Nicotine cut to make smoking non-addictive
NICOTINE in cigarettes is set to be cut to non-addictive levels for the first time after American regulators unveiled radical plans aimed at reducing the number of smokers, in a move hailed by British health experts as having “international significance”.
The US Food and Drug Administration (FDA) has launched a landmark consultation to restrict nicotine levels, citing the “overwhelming” levels of death cigarettes cause.
Although the FDA move will only affect cigarettes sold in the US, British health experts welcomed it. Research has suggested cigarettes would have to be made 30 times weaker to effectively become non-addictive.
The development is a bad one for the global tobacco industry, with estimates the largest producers could lose around $60billion (£46billion) in market value.
Announcing the move, Scott Gottlieb, the FDA commissioner said it would “begin a public dialogue” on introducing more regulations, saying cigarettes are the “only legal consumer product that, when used as intended, will kill half of all long-term users”. “Unless we change course, 5.6million young people alive today will die prematurely later in life from tobacco use.”
Among the plans, the FDA said it would also be looking to make it easier for less harmful nicotine products to enter the market and said it “must also recognise potential for innovation”.
Prof Linda Bauld, professor of health policy at the University of Stirling, said: “These long-awaited plans have international significance. They suggest the US may be the first country in the world to require product standard for cigarettes that include reducing nicotine to non-addictive levels.”
In the UK, 2.6 million people currently use e-cigarettes. They are now the most popular way for Brits to quit smoking. Sales of cigarettes have been declining in recent years, with figures released by the Office for National Statistics last month showing the number of UK adults who smoked fell 17 per cent between 2015 and 2016. Today, less than a third of Brits smoke cigarettes regularly.
Financial experts concurred that the US rules appeared to trigger a very significant shake-up for the industry. “It’s hard to overstate what this could mean for the companies affected: non-addictive levels of nicotine would likely mean a lot fewer smokers and of those people who do still light up, smoking a lot less,” said Neil Wilson, a senior market analyst with ETX Capital in London. This is just the US regulator acting but we can easily see others, particularly in Europe, where regulatory pressures are already extremely high, following suit.”
Shares in British American Tobacco fell 6.8per cent to finish 362p lower, wiping £5.8 billion off its market value. Imperial Brands saw its shares end the day down 130.5p.
A RADICAL plan by the US drugs regulator to reduce nicotine in cigarettes to non-addictive levels saw shares in FTSE 100 tobacco giants British American
Tobacco and Imperial Brands go up in smoke. The US Food and Drug Administration’s proposal to stub out the habit, which it says kills half of users, sparked a global tobacco sell-off as defensive stocks known for their steady earnings came under attack.
Heavily exposed to the US market through its stake in Reynolds, British American Tobacco crashed as much as 14pc before recovering to finish 362p lower at £49.60, a 6.8pc plunge, while less exposed Imperial slid 130.5p to £33.16.
“It’s hard to overstate what this could mean for the companies affected. Non-addictive levels of nicotine would likely mean a lot fewer smokers and of those people who do still light up, smoking a lot less,” argued ETX Capital market analyst Neil Wilson.
“This will blow a hole in their earnings and forces a fundamental re-evaluation of earnings.”
Meanwhile, Smirnoffmaker Diageo bucked a stumbling wider market as analysts toasted to the world’s largest distiller’s turnaround tale and £1.5bn share buyback.
Adding the company, also behind Johnnie Walker and Guinness, to its “outperform” list, Bernstein cited growing confidence in Diageo’s ability to deliver mid-single digit revenue growth from its portfolio of brands and the company’s over-deliverance on cost-savings for its ratings upgrade.
However, Liberum warned investors that some of Diageo’s “growth initiatives risk repeating the boom and bust extensions of yesteryear”.
While the FTSE 100 nursed an earnings seasoninduced hangover, Diageo finished among the top gainers for a second consecutive day, climbing 33.5p higher to £24.42, its highest share price. Pharma giant
Astrazeneca took a small step forwards, rising 3.6pc or 156.5p to £44.82, as the dust settled from its 15pc slide on Thursday. The wider FTSE 100 index closed 74.64 points lower at 7,368.37, a 1pc slump.
On the FTSE 250, Just Eat tumbled 34.5p to 636.5p after Barclays raised doubts over the takeaway pioneer’s plan to take on Ubereats and Deliveroo and build relationships with chain eateries. Analyst Gerardus Vos downgraded the stock to “equal weight”, arguing that cosying up to big restaurant brands could hurt second half profits and jeopardise Just Eat’s relationship with the small curry houses and Chinese takeaways that made its name.
Finally, the family of owners behind fast fashion retailer Quiz cashed in on the company’s success to the tune of £92.1m after it listed on AIM with an additional £10.6m placed back in the Glasgow-based brand to bump up growth. Investors were quick to grab a slice of the action on Quiz’s debut following rivals ASOS and Boohoo.com’s runaway successes on the junior market. Quiz finished 29.4p higher than its admission price at 198.4p.