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  • Markets Stand Behind Tobacco

    Markets Stand Behind Tobacco

    Seeking Alpha, a crowd-sourced content service that publishes news on financial markets, said the prices of tobacco and smoking products in the U.S. rose 6.8% in January compared to a year ago on an unadjusted basis. Overall, core inflation was up 3.3% year-over-year during the month, which was slightly higher than the pace in December and above the expectations of analysts.

    On a month-to-month comparison, tobacco and smoking products were up 0.4% in January to mark the fifth month in a row of higher pricing for the broad category.

    Analysts have not moved off their position that Philip Morris International, Altria, Imperial Brands, and British American Tobacco could all see benefits under the Trump Administration.

    Seeking Alpha said, “UBS sees the Republican control of Congress as a slight positive for tobacco stocks. Analyst Faham Baig reminded investors that Republican control has historically been seen as a positive for U.S. tobacco, due to the likelihood of reduced regulation. On that note, the Office of Information and Regulatory Affairs at the OMB withdrew in January the menthol cigarette ban and the U.S. has pulled back from the World Health Organization.”

  • Busy Day for BAT Stocks

    Busy Day for BAT Stocks

    British American Tobacco (BAT) executed a share buyback program January 27, purchasing 129,541 ordinary shares at an average price of £29.951908 per share. According to TipRanks, this move, authorized by shareholders, “is part of its broader strategy to enhance shareholder value by reducing the number of shares in circulation, which could potentially impact the company’s stock value and stakeholder interests.”

    Later in the day, the stock rallied to £31.50 on what proved to be an all-around great trading session for the stock market, with the FTSE 100 Index. According to MarketWatch, that price was a 52-week high for BAT, surpassing the £30.47 from January 24.

  • Wall Street Likes Big Tobacco

    Wall Street Likes Big Tobacco

    According to Seeking Alpha, a leading financial research firm, U.S.-listed tobacco companies had a successful year of returns in 2024. “The dividend aristocrats Philip Morris, British American Tobacco, and Altria Group rose between 24% and 27.9% last year, compared to S&P 500’s 23.3% gain during that period,” Seeking Alpha wrote.

    Seeking Alpha’s analysts and Wall Street opinions think 2025 will be equally positive for Big Tobacco.

    “On British American Tobacco, the bullishness of SA analysts crossed with one Sell, two Holds, and a Buy recommendation of sell-side analysts. Similarly, Altria Group got a resounding Buy from Seeking Alpha analysts compared to a wide spectrum of opinions on Wall Street.

  • Bullish on BAT

    Bullish on BAT

    “British American Tobacco (BAT), trading at €35.14 per share with a market cap of €77.45 billion and a 7.97% dividend yield, presents a compelling case for income-focused investors,” Ricardo Pillai wrote for Yahoo! Finance. “Despite modest growth expectations and ongoing regulatory risks, BAT’s strong cash flow, leadership in emerging categories like vapor and modern oral products, and attractive valuation make it an appealing defensive play. The stock trades at a forward P/E of approximately 7x, significantly discounted compared to peers like Philip Morris (PMI) and Altria, signaling potential undervaluation for a company with consistent earnings and robust dividend sustainability.”

    Pillai said BAT’s strategy was to reduce dependance on combustible products, and pivot to being 50% smokeless by 2035. Its Vuse brand e-cigarette holds 40.3% value share of top markets, and is making strides with Velo in the modern oral market. Analysts are bullish on BAT’s future because it appears to be striking a middle ground that investors seek in terms of products and markets.

    “The overarching investment thesis hinges on BAT’s ability to accelerate growth in new categories at a pace exceeding the decline of its smoke products,” Pillai said. “While the strategy is ambitious, its execution thus far has been promising. For investors seeking a reliable dividend stock with modest growth potential, BAT offers a stable and defensive portfolio addition. With regulatory challenges already factored into its valuation, the next financial release will be pivotal in confirming its strategic trajectory. BAT remains a ‘Buy for Income,’ not a growth play, but a compelling option for those prioritizing steady returns.”

  • Stock Buybacks Underway

    Stock Buybacks Underway

    Several large tobacco industry stalwarts have continued with stock buyback programs this week.

    British American Tobacco announced the repurchase of 134,079 ordinary shares at an average price of 2,904.6775 pence per share as part of its ongoing buyback program. This move is aimed at reducing the number of shares in circulation, potentially increasing the value of remaining shares and benefiting shareholders. Following the completion of this transaction, the company will have 2,208,154,745 shares outstanding, with 133,266,206 held in treasury, thereby impacting shareholders’ notifications under regulatory guidelines.

    Imperial Brands PLC announced the repurchase and cancellation of 152,276 of its ordinary shares as part of its GBP 1.25 billion share repurchase program. This transaction, executed through Morgan Stanley on the London Stock Exchange, aims to reduce the overall number of shares in circulation, potentially enhancing shareholder value by increasing earnings per share.

  • Report: E-Cig Market to Reach $23B by 2029

    Report: E-Cig Market to Reach $23B by 2029

    The E-cigarette market is projected to grow from its current $18.98 billion to $23.15 billion by 2029, an increase of 3.4%, that according to the “E-Cigarette Market Research Report 2020-2029” that was released today.

    The global e-cigarette market is highly competitive, characterized by the presence of key players such as Altria Group, British American Tobacco (BAT), Imperial Brands, and Japan Tobacco International (JTI). With the declining sale of traditional cigarettes due to increasing health awareness and regulatory pressures, such companies have aggressively entered the e-cigarette market, pushing innovation and technology.

    The global e-cigarette market continues to see user-friendly products introduced that are popular with beginners, as well as open systems including mods that offer greater customization options for experienced vapers. Advancements in battery technology and improvements in e-liquid formulation have likewise helped advance the vaping experience.

    Governments, non-profit organizations, and healthcare providers have for decades been pushing awareness against the health risks of smoking, which is positively impacting the e-cigarette market.

  • A Platform for Dialogue

    A Platform for Dialogue

    Photos: BAT

    With its Omni tool, BAT has released a dynamic, science-based guide to tobacco harm reduction.

    By Stefanie Rossel

    The concept of tobacco harm reduction (THR) dates back to at least 1976, when Michael Russell made his famous statement that people smoke for the nicotine but die from the tar and suggested that altering the ratio of tar to nicotine could be the way to safer smoking. Almost 50 years on, there is an extensive array of less hazardous alternatives to combustible cigarettes, but misconceptions about nicotine and reduced-risk products (RRPs) continue to be so pervasive that the R Street Institute last year even published a list with the 10 most common misperceptions, arguing that over the past decade, an overwhelming onslaught of misinformation from academics, media outlets and public health agencies had created confusion and significantly slowed THR activities.

    BAT has set out to overcome these misunderstandings with a new tool. At its first-ever Transformation Forum, which took place in London in September, the company introduced Omni, an evidence-based, accessible and dynamic knowledge resource that shows how science and innovation can converge to achieve a smokeless world.

    Under its “A Better Tomorrow” strategy, the company aims to migrate adult smokers who would otherwise continue to smoke from cigarettes to smokeless products and to ultimately consign cigarettes to the dustbin of history. On its transformation journey, however, the company has faced several challenges, including the rejection of THR by key regulatory bodies and nongovernmental organizations, markets that prevent the sale of RRPs, onerous regulatory frameworks that hinder innovation, skepticism toward industry research as well as the already-mentioned misperceptions about nicotine and the relative risks of combustion-free products.

    James Murphy

    Omni, BAT states on its website, is intended to be a compendium of information that underpins the company’s corporate and scientific strategy and offers insights into the work being done at BAT to achieve a world without cigarettes. “The world’s first-of-its-kind resource, Omni explains why THR should be a prominent component of the public health strategy on tobacco,” says James Murphy, director of research and science at BAT. “It draws from hundreds of independent scientific studies, BAT’s own research into its smokeless innovations, and examples of THR in action globally. Beyond that, Omni serves as a dynamic platform for thoughtful, constructive conversations with stakeholders rooted in evidence, where open dialogue around THR is not just welcomed but encouraged.”

    Omni differs from BAT’s Science website, which focuses on the innovations driving the company’s business, Murphy points out. The Science website “serves as a hub for publishing data and peer-reviewed research on our smokeless products such as Vuse, VELO and Glo. The website also provides insights into our global research and development network, which comprises 1,750 R&D specialists across eight different sites worldwide. The emphasis here is on showcasing the science behind our products rather than facilitating discussions on THR policy,” says Murphy.

    Engaging All Stakeholders

    Kingsley Wheaton

    Omni is targeted at scientists, public health authorities, regulators, policymakers and investors, and it aims to spur a dialogue across the wider scientific and regulatory ecosystem related to tobacco and nicotine products. Across nine chapters, it addresses the big questions that the company and the tobacco industry in general are confronted with, among them classics such as what exactly tobacco harm reduction means, whether smokeless products are a gateway to cigarette smoking or what the role of flavors in smokeless tobacco and THR is.

    “We believe that open and constructive dialogue with a broad range of stakeholders is crucial for accelerating the decline in global smoking rates,” says Kingsley Wheaton, BAT’s chief corporate officer. “It is incumbent on regulators, scientists and policymakers to review the scientific and real-world evidence on THR and engage in dialogue on how to encourage smokers to switch completely to smokeless alternatives with a reduced-risk profile. Unfortunately, there are few spaces where these groups can review such evidence and reach common ground on THR science to drive progress.”

    According to Wheaton, Omni demonstrates that the evidence in support of THR is growing daily. “Sweden, which is on the brink of becoming smoke-free, has the lowest adult smoking rates and lung cancer deaths in Europe, which has attributed to the availability, affordability and increased use of smokeless tobacco and nicotine products,” he says. “Yet there is still significant debate on whether THR strategies should be used to reach global smoke-free targets, and more countries are restricting the sale of smokeless alternatives. Our hope is that Omni becomes the platform to engage these stakeholders so that we can create whole-of-society solutions and build smarter regulation that allows THR to flourish.”

    BAT plans to make Omni, which is also available as a PDF download, a fully online, dynamic resource in the coming months. “With THR research rapidly evolving, we want Omni to reflect the latest evidence in support of THR,” says Wheaton. “A team of scientists will regularly update Omni by assessing and collating new academic research, including BAT’s latest peer-reviewed evidence. Omni will both push out information and pull in insights, but the ultimate goal is to create a platform for dialogue. That’s why we are inviting anyone who shares our belief that a smokeless world is possible—and even those who don’t agree with us—to interrogate the evidence and join us on our journey to ‘A Better Tomorrow.’”

    Major Milestone

    BAT will be introducing new tools and technology-enabled platforms to facilitate the interrogation of the latest science and real-world experience of tobacco harm reduction, Wheaton says. “For example, it gives us the opportunity to develop a tech-driven Omni tool to give stakeholders in the THR policy debate more access to our evidence-based answers to the big questions facing our sector and society.”

    “Omni is not a broadcast channel for BAT to talk about tobacco harm reduction,” he stresses. “Our ambition is for Omni to be a platform for a necessary conversation with stakeholders rooted in evidence—a manifesto for change and a call to action, backed by high-quality science and real-world evidence.”

    Omni, Murphy explains, is the result of a major scientific effort, involving over 60 contributors and writers. “It covers products that involve around 9,800 global patents and cites more than 600 pieces of external evidence. This comprehensive compendium reflects over a decade of research—both our own and independent studies—into THR, and we have included the very best of published industry science for assessing the risk profile of smokeless products. We’re incredibly proud of this achievement, and as we’ve said, this is just the beginning.”

    “The launch of Omni marks a major milestone in our transformation toward a smokeless world, and we’re excited about the progress it represents for both us and the industry. By 2030, we aim to have 50 million adult consumers of our smokeless products, and by 2035, for smokeless products to make up at least 50 percent of our global revenue,” says Wheaton. “The ultimate goal we are working toward is a fully smokeless business, hopefully in a fully smokeless world. We believe Omni will be instrumental in achieving this vision, and we’re eager for the next chapter.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • BAT Moving Listing Would be ‘Distraction’

    BAT Moving Listing Would be ‘Distraction’

    BAT CEO Tadeu Marroco dismissed the idea of moving the company’s listing to New York from London, stating that it “would create a lot of distraction internally,” according to the Financial Times. Marroco also noted that he wasn’t sure “the benefit would be as evident as some suggest.”        

    In 2023, Rajiv Jain, chair and chief investment officer of U.S. investment group GQG Partners, which at its peak owned 4 percent of BAT stock, urged BAT to switch its primary listing to the U.S. Jain argued that Philip Morris International, which GQG Partners also owns a stake in, trades at a much higher earnings multiple.     

    GQG Partners sold out of BAT in July 2023 due to BAT’s refusal to move its listing.

    Marroco said in regards to the possibility of moving the company’s listing, “I don’t think that in this period of time, we should be focused on this.” He noted that he has “many other things” he needs to do and that “There is nothing to suggest that … it’s a no-brainer to go to the U.S.”

    While Marroco acknowledged that London’s capital markets are struggling to attract and retain listings, he noted that there are advantages to staying in the U.K.

    “If you have a shareholding of a U.K. [listed company] and you are located outside, you don’t pay withholding tax on your dividends, which is different from the U.S.,” he said.

    “Hopefully, we can see that in 10 years’ time, we don’t have this type of discussion. Today, there’s a lot of emotion that relates to it because of the frustration of some that are leaving.”

    BAT recently announced a sale of part of its stake in ITC to restart BAT’s share buyback program. “What’s most important for me is that having restarted the buyback, this should be a consistent feature in terms of our capital allocation,” said Marroco.

    “We have a massive business in the U.S. that we can use to sell [new products],” he said. BAT’s U.S. cigarette sales have fallen, driven by consumers switching to cheaper brands and cigarette alternatives such as heated-tobacco products. By 2035, BAT aims to have 50 percent revenue from alternative products.

  • BAT Share Buyback Begins

    BAT Share Buyback Begins

    Image: maurice norbert

    BAT’s program to buyback BAT ordinary shares using proceeds from its sale of shares in ITC Limited begins Monday, March 18, 2024. The final net proceeds received by the BAT Group from the sale were £1.57 billion ($1.99 billion), and the program will buy back £1.60 billion of BAT ordinary shares starting with £700 million in 2024 and the remaining £900 million in 2025. The program will end no later than Dec. 31, 2025.

    The purpose of the program is to reduce the issued share capital of the company. The purchased shares will be canceled. The company has entered into an agreement with UBS AG London Brance to enable the purchase of ordinary shares for the initial stage of the program. UBS will purchase the company’s ordinary shares as principal, and the company will purchase such number of ordinary shares form UBS in accordance with the terms of the engagement.

    The number of ordinary shares permitted to be purchased by the company is 223,590,721 ordinary shares. The program will be carried out on Recognized Investment Exchanges within the U.K. For the avoidance of doubt, no repurchases will be made in respect of the company’s American Depositary Receipts.

  • BAT Faces Lawsuits Over Impairment

    BAT Faces Lawsuits Over Impairment

    Image: Vitalii Vodolazskyi

    BAT is facing potential shareholder lawsuits targeting the $31.5 billion write-down in the fair market value of R.J. Reynolds Tobacco Co.’s traditional cigarette brands, according to the Winston-Salem Journal.

    The write-down was disclosed in early December 2023. BAT changed the value status of Newport, Camel, Pall Mall and Natural American Spirit to “finite” from “indefinite.” The value lifespan of these brands has shifted to about 30 years from “perpetual,” according to Tadeu Marroco, BAT CEO, in the company’s fiscal 2023 financial update.

    Multiple law firms, including Rosen Law Firm and Kuznicki Law, are soliciting plaintiffs for a class-action lawsuit. Some firms have cited a deadline of March 25, but a new round of solicitations has been made this week.

    The law firms are requesting a class-action period of Feb. 9 to Dec. 6 for purchasers of BAT’s publicly traded securities.

    BAT and certain unnamed current and former executives are potential defendants.

    The potential lawsuits claim that BAT “made false and/or misleading statements and/or failed to disclose that BAT materially understated the risks and potential likelihood of an impairment to its premium American cigarette brands as a result of various longstanding headwinds.”

    Following the write-down, investors sent share prices down 9 percent.

    According to PricewaterhouseCoopers, an indefinite value “has no expiration date barring any significant legal, regulatory, contractual, competitive, economic or other factors that limit its useful life to the reporting entity.” A finite value typically covers brands whose worth is likely to decline over time.

    Reynolds has been under increasing pressure from BAT to improve overall traditional cigarette performance. According to Marroco, BAT’s “performance in U.S. combustibles (traditional cigarettes) has been disappointing. Returning combustibles to consistent value creation is critical to our multi-category strategy in the U.S.”