Va­p­ing wipes £100bn off cig­a­rette in­dus­try

The Sunday Telegraph - Money & Business - - Front page - By Oliver Gill

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.

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