Vaping wipes £100bn off cigarette industry
MORE than £100bn has been wiped off the value of the world’s five biggest tobacco companies this year as worries grow about increased regulation and the rise of vaping.
London-listed giant British American Tobacco (BAT) has been worst hit and lost about half its stock market value. Rival Imperial Brands is down around a quarter. US duo Altria and Philip Morris have shed roughly 30pc, and Japan Tobacco is a fifth lower.
As the FTSE 100’s biggest laggard of 2018, BAT has been hardest hit following its 2017 blockbuster $47bn (£37bn) merger with Reynolds.
According to Fidelity Personal Investing associate director Ed Monk, investors have become “sceptical that big tobacco can replace sales of cigarettes with next-generation vape products”.
In November, the US Food and Drug Administration (FDA) announced that it is considering banning menthols cigarettes, a move that would impact BAT worst as a result of swallowing up Reynolds – more than half of its sales are from menthol cigarettes.
RBC analyst James Edwardes Jones said: “The impact of the FDA’S menthol cigarette ban and margin erosion from the growth in next-generation products is priced in, although for this previously uber-defensive and predictable stock the future is very opaque.”
The prospect of a menthol ban came just weeks after boss Nicandro Durante said he would step down next year.