The world's second largest tobacco maker, British American Tobacco (BAT), said on Wednesday a slowdown in the US vaping market would lead to lower revenue growth in its vaping arm even as it gained market share in its traditional cigarettes business.
US health officials have reported more than 2,000 cases of vaping-related lung illness and 47 deaths linked to its use in the country, leading to tighter regulatory scrutiny and individual state bans.
This has led to a drop in demand for the devices, pushing BAT to forecast revenue growth in its new categories business – e-cigarettes, tobacco heating and oral products – to be at the low end of its 30-50 per cent target. It had previously anticipated revenue growth in the middle of that range.
US vaping products make up 17 per cent of BAT’s new categories and generate 0.8 per cent of total group revenue, according to Jefferies.
It controls only a sliver of the market, in contrast to rival Altria-backed Juul, which has three-quarters of market share.