Tag: British American Tobacco

U.S. Combustibles Hamper BAT

Photo: BAT
British American Tobacco (BAT) reaffirmed its annual revenue and profit forecasts on June 6, but acknowledged that its performance in the United States has been hampered by weaker cigarette demand.
“I am pleased with our performance in a number of key areas,” said BAT recently appointed CEO Tadeu Marroco in his first trading update. “We increased the number of consumers of non-combustible products by a further 900,000 in Q1, driving good revenue growth and further reducing losses of New Categories means we are on track to deliver our £5 billion [$6.2 billion] revenue ambition in 2025, with profitability in 2024, irrespective of the timing of the transfer of our Russian and Belarusian businesses.
“Outside the U.S., combustible brands have been performing well as we address portfolio gaps and optimize pricing. Consistently driving value from our combustibles brands is critical, as they deliver substantial cash returns and generate value to fund New Categories and our transformation.
“We are also making good progress towards de-leveraging our balance sheet, supporting our ambition to sustainably return excess cash to shareholders.

Returning combustibles to consistent value creation is critical to our multi-category strategy in the U.S.
Tadeu Marroco, CEO, BAT
“That said, there are operational issues that will have my focus. Our performance in U.S. combustibles has been disappointing. Returning combustibles to consistent value creation is critical to our multi-category strategy in the U.S. We are taking action, and while it will take some time to carefully and thoroughly implement our plans, our volume share has grown sequentially since the start of the year.”
BAT has been affected by a voter-approved ban on flavored tobacco products in California, but reported increased sales of flavored products in neighboring states.
BAT has been investing in e-cigarettes and heat-not-burn devices as consumers transition to tobacco-free alternatives. While its Glo tobacco heating product’s volume share decreased, sales of Vuse vapes grew.
However, government regulations and the risk of illicit sales pose challenges to these alternatives, according to BAT.
The company maintains its outlook for a 3 percent to 5 percent rise in 2023 organic revenue at constant currency rates and mid-single digit growth in adjusted earnings per share.
June 6, 2023
World Vape Day:

Photo: BAT
A new scientific study on Vuse underscores the contribution vapor products can make toward tobacco harm reduction.
By James Murphy
Almost 20 years ago, I joined BAT as a scientist motivated by the positive change that tobacco harm reduction (THR) can achieve. We have made great strides since then, and on days like World Vape Day, it is encouraging to see continued innovation in this area. This ambition to support THR is embodied by BAT’s release today of one of the largest vapor product studies ever conducted, further supporting the role that Vuse, BAT’s flagship vapor brand, can play in tobacco harm reduction.
Science and research have been fundamental to the progress that I have witnessed over almost two decades at BAT. Together, they form the cornerstone of consumer and regulatory confidence in our brands. This confidence is essential for our new-category products to be able to both support THR and provide reduced-risk*† alternatives for consumers who would otherwise smoke.
Early in my career, I had the opportunity to lead product development for BAT’s first vapor product, which would subsequently turn into Vuse: a billion-pound brand and the No. 1 global vaping brand by market share.¹ Now, in 2023, there is wide acceptance that vaping continues to grow in importance as adult smokers seek reduced-risk alternatives to continued smoking.
As director of research and science at BAT, my priority is to develop and publish science-based information needed to better understand the real-world impacts of our products.
Our latest study, published today in the peer-reviewed journal Internal and Emergency Medicine, is intended to do just that. By comparing clinical measurements from exclusive Vuse consumers with current smokers, the results of the study show that adult consumers using BAT’s vapor brand Vuse² had significantly better results for biomarkers relevant to smoking-related diseases than smokers.
For priority cigarette smoke toxicants identified by the World Health Organization, levels of exposure were significantly lower in the Vuse consumers compared to the smokers. Additionally, favorable differences between the Vuse consumers and smokers were found across all seven measured biomarkers of potential harm relevant to smoking-related diseases.
We believe these results underscore the contribution that vapor products can make toward tobacco harm reduction and how, by using a robust evidence base to substantiate the role of reduced-risk* products, we can give adult smokers who would otherwise continue to smoke access to satisfactory reduced-risk* alternatives.
While World Vape Day brings together a global community to converse and learn about tobacco harm reduction, there are significant barriers and challenges facing companies involved in the vaping industry. I believe a core component to overcoming these barriers is evidence-led and science-backed regulation and leadership. These two areas are key to ensuring that reduced-risk* products are only made available to adult consumers and that consumers feel confident about the quality and safety standards governing the development of alternatives like vapor products.
In countries where the concept of tobacco harm reduction has been embraced, we have seen accelerated declines in smoking rates as smokers migrate to noncombustible products. Sweden, for instance, is on the cusp of becoming the first European country to become officially smoke-free—with smoking rates at just 5.6 percent—a 51 percent drop in a decade. Low smoking rates have also had direct benefits for Swedish public health, with cancer rates that are 41 percent lower than the rest of Europe. However, many countries are yet to offer consumers legal access to reduced-risk* products as alternatives to widely available conventional cigarettes.
I am more convinced than ever that tobacco harm reduction has the potential to be transformative for our consumers and significantly lower currently projected smoking rates worldwide.
There is a clear opportunity to use the scientific evidence we now have available to substantiate the benefits of reduced-risk* products for those who would otherwise smoke. Looking ahead, I am increasingly confident that the quality of ongoing research from us, other manufacturers, academics and public health authorities—combined with open and honest debate with a diverse range of political, regulatory and public health stakeholders—will accelerate tobacco harm reduction.
James Murphy is the director of research and science at BAT.

* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk-free and are addictive.
† Our products as sold in the U.S., including Vuse, Velo, Grizzly, Kodiak and Camel Snus, are subject to FDA regulation, and no reduced-risk claims will be made as to these products without agency clearance.
¹ Based on Vype/Vuse estimated value share from recommended retail price in measured retail for vapor (i.e., total vapor category value in retail sales) in the U.S., Canada, France, the U.K. and Germany. These five markets cover an estimated 77 percent of global vapor closed-system net turnover, calculated in June-July 2021.
² The study focused on self-reported exclusive users of commercially available Vuse ePod or Vuse ePen3. Thus, references to “Vuse” in the context of the study means either Vuse ePod or Vuse ePen3.
May 30, 2023
BAT Appoints Tadeu Marroco as CEO

Tadeu Marroco | Photo: BAT
BAT has appointed Tadeu Marroco as CEO to succeed Jack Bowles, who is stepping down from the board of directors May 15.
Marroco joined BAT in 1992 and was appointed to the BAT board in 2019 as group finance director. He has also served on the BAT management board since 2014, with previous roles including regional director for Europe and North Africa and group transformation director. A comprehensive search for a new group finance director will now commence. Javed Iqbal, who has had an extensive finance career in the group and is currently the director of digital and information, will take on the role of interim group finance director until a permanent successor has been appointed.
“Since our ‘A Better Tomorrow’ strategy was articulated in 2019, we have achieved clear momentum in our New Categories business, have established leadership in key markets and expect to deliver New Categories profitability earlier than originally planned,” said BAT chair Luc Jobin in a statement. “During this time, we have also continued to deliver solid financial results and have returned over £20 billion [$25.03 billion] to our shareholders. On behalf of the board, I would like to thank Jack for his significant contribution as chief executive during this important period.
“To fully deliver on our transformation in a fast-changing environment, we must continue to evolve as a high-performing and agile consumer goods company. In considering succession, the board recognized Marroco’s outstanding track record of developing teams that deliver on our transformation alongside a consistent focus on strong execution and financial performance. We are confident that under his leadership we will further strengthen our relationships with key stakeholders and continue to build A Better Tomorrow and deliver long-term sustainable value for our shareholders.”
“I am honored to be appointed as chief executive of BAT. I wish to thank Jack, who has been instrumental in establishing our A Better Tomorrow strategy,” said Marroco. “Having been at the center of the formulation of this strategy, I am convinced that this is the right strategic path for BAT. In this dynamic environment, I remain firmly committed to focusing on results delivery through executional excellence.
“Throughout my 30-year career with this great company, inclusivity and collaboration have always been at the heart of my leadership approach. My commitment as the new chief executive will be to nurture the passion in BAT for our people, our consumers and our brands. My management team and I will continue to build an increasingly agile and progressive BAT.”
“It has been my privilege to lead BAT since 2019,” said Bowles. “In the last four years, we have set out to transform the business toward ‘A Better Tomorrow’ through a focus on growth of New Category consumer brands, which account for almost £3 billion of revenue. It is now the time for a change of leadership to take the business to the next level.”

In considering succession, the board recognized Tadeu’s outstanding track record of developing teams that deliver on our transformation alongside.
Luc Jobin, Chair, BAT
“As I leave, I thank all my colleagues and the board for their support and dedication to this strategy and to the transformation of the business which we achieved. After 20 years in the company I look forward to my next steps. I wish my successor Marroco , who has been our group finance director for four years, and the great team at BAT, all the success to continue the journey. Given the quality of BAT’s talent pipeline, I am confident that BAT will continue to be successful.”
May 15, 2023
BAT to Upgrade Bangladesh Factory

Image: Piotr Pawinski
British American Tobacco Bangladesh plans to invest BDT607 million ($5.65 million) in equipment and a centralized uninterrupted power supply device, reports The Daily Star.
In Dhaka Stock Exchange filing, the multinational company said its board has approved the investment decision.
The company will use the money to purchase winnower tobacco recovery equipment, a hinge-lid cigarette making and packing line, and a centralized uninterrupted power supply device.
The investment would enhance the capacity and productivity of the company and would be funded from internal sources and bank financing, the filing said.
May 12, 2023
Betting on Weed

Photo: contentdealer
BAT has further increased its investments in the cannabis industry.
By Stefanie Rossel
In its endeavor to transform its business, initiated in 2020 under the slogan “A better tomorrow,” BAT is increasingly focusing on the cannabis sector to diversify beyond tobacco and nicotine. Two years after its first venture into the hemp market, the group currently has partial stakes in 13 cannabis startups, more than any other tobacco company, according to Seeking Alpha, a financial services provider.
BAT’s most recent move in this direction is a joint venture with Denver, Colorado-based cannabidiol (CBD) producer Charlotte’s Web Holdings in early April. BAT’s subsidiary AJNA Bio Sciences, a botanical drug development company focused on mental health and neurological disorders, has teamed up with Charlotte’s Web and is contributing $10 million as the joint venture’s initial investor. AJNA was co-founded and is partially owned by its president, Joel Stanley, the former CEO and chairman of Charlotte’s Web, together with other founding members of Charlotte’s Web.
The aim of the cooperation is to develop from propriety Charlotte’s Web hemp genetics a botanical drug targeting a neurological condition and pursue approval by the U.S. Food and Drug Administration. While the joint venture did not disclose the neurological condition, observers suspect that the drug is aimed at the treatment of seizure disorders. Charlotte’s Web is also the name of a hemp strain from which an oil can be made that can be used to treat Dravet syndrome and other epilepsy diseases.
The strain, which contains 17 percent CBD and 0.5 percent of the psychoactive ingredient tetrahydrocannabinol, was bred in 2011 by the Stanley brothers to treat a young girl suffering from a severe form of pediatric epilepsy that did not respond to commonly used anti-epileptic drugs. Encouraged by the patient’s positive response to their CBD oil, the brothers established a nonprofit organization to give seizure patients access to high-quality cannabis with a high CBD content. With their advocacy, they helped change laws and public perceptions relating to plant-based solutions. Nevertheless, their product did not become the first treatment derived from cannabis plants to receive FDA authorization. That honor fell to Epidiolex, which contains only CBD and was approved by the agency in 2018.
The joint venture, in which BAT holds a 20 percent stake and Charlotte’s Web and AJNA have a 40 percent stake each, will be led by representatives of all three companies. Its clinical and regulatory strategy will be led by Orrin Devinsky, who was a principal investor in the FDA approval of Epidiolex. Apart from being AJNA’s chief medical advisor, he is also the director of New York City University Langone’s Comprehensive Epilepsy Center. The joint venture wants to file an investigational new drug application and commence phase I clinical development in 2023.
In November 2022, BAT paid £48.2 million ($60.36 million) for a 19.9 percent stake in Charlotte’s Web, a leading company in hemp extract products and the only publicly traded CBD B Corp-certified company. According to its latest financial reports, Charlotte’s Web generated revenues of $74.13 million in 2022.
In mid-March, a major shareholder urged BAT to move its primary stock market listing from London to New York. About 60 percent of BAT’s profits come from the U.S. while only 1 percent is generated in the U.K. With a move to the U.S., analysts argued, the FTSE 100-listed company would not only gain an investor base with greater appreciation of reduced-risk products but also be better equipped if it wanted to venture into the cannabis markets. U.K. law prohibits a company from listing if its profits are sourced from recreational cannabis, even if they are earned in a jurisdiction where marijuana is legal. Although similar restrictions currently exist in the U.S., analysts expect these issues to be addressed in the near future.
With its recent investments, BAT continues its exploration of the cannabis business, which started in March 2021, when it acquired a minority stake in Organigram Holdings of Canada for CAD221 million ($175 million at the time). Canada legalized cannabis in October 2018. Through a number of acquisitions and organic growth, Organigram has since become the second-largest licensed cannabis producer in Canada.
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.

May 1, 2023
BAT Settles Investigation

Image: alexlmx
BAT has reached an agreement with the U.S. Department of Justice (DOJ) and the Office of Foreign Assets Control (OFAC) to resolve investigations into suspicions of sanctions breaches concerning business activities relating to the Democratic People’s Republic of Korea between 2007 and 2017.
BAT has entered into a deferred prosecution agreement with the DOJ and a civil settlement agreement with the OFAC, and an indirect BAT subsidiary in Singapore has entered into a plea agreement with the DOJ. The total amount payable to the U.S. authorities is $635.24 million plus interest.
Under the agreement, BAT cannot comment on the documentation published by the investigating authorities or on related factual matters.
As announced in its half-year report of 27 July 2022, BAT recognized a provision of £450 million ($540 million) in line with the International Accounting Standards 37 requirements. its full year 2023 group guidance is unaffected by this announcement.
“On behalf of BAT, we deeply regret the misconduct arising from historical business activities that led to these settlements and acknowledge that we fell short of the highest standards rightly expected of us,” said BAT CEO Jack Bowles in a statement.”
“Adhering to rigorous compliance and ethics standards has been, and remains, a top priority for BAT. In recent years, we have transformed our compliance and ethics program, which encompasses sanctions, anti-bribery, anti-corruption and anti-money laundering. The significant steps already taken, as well as the continued refinements to the program that will be made as part of these settlements, will leave us even better equipped to lead a responsible and sustainable business.”
April 26, 2023
Court Rejects Challenge to PMI Heating Patents

Image: nimalGraphic
The High Court of Justice in London ruled April 17 that Philip Morris Products’ (PMP) patents protecting a tobacco-heating technology are valid, reports Law360. The ruling represents a defeat for BAT and its Nicoventures subsidiary, which had sought to revoke PMP’s patents.
While considering the patent valid, the court also said that BAT’s Glo heated-tobacco products did not infringe the patents, heading off an infringement counterclaim filed by PMP.
The April 17 ruling is the latest chapter in an ongoing intellectual property dispute between the tobacco giants.
PMP initially sued BAT and Nicoventures, claiming they infringed several of its tobacco-heating technology patents. This prompted BAT and Nicoventures to file counterclaims seeking to invalidate the patents.
The proceedings have now branched off into several different actions before the High Court.
In the current case, Nicoventures argued, among other things, that the PMP technology was obvious in light of a 1998 patent application referred to as “Pienemann,” which covers a “system for providing an inhalable aerosol.”
While Pienemann, like PMP’s technology, has multiple heating elements, Judge Michael Tappin said that a skilled team would consider the multiple heaters to “mimic” one heater. Pienemann also did not specify the inclusion of a thin-film heater as seen in the PMP patent, instead describing a “graphite loaded sheath,” according to the judgment.
Regarding the infringement claim, Tappin said that BAT’s Glo products did not infringe the patents because they did not include a method of allowing different parts of the heating system to be heated at different times.
April 19, 2023
BAT Chair Lauds Progress in 2022

Luc Jobin (Photo: BAT)
BAT made great progress against its strategy in 2022 despite a challenging external environment, according to chairman Luc Jobin.
Speaking at the company’s annual general meeting on April 19, Jobin noted that BAT’s new category business delivered strong volume, revenue and market share growth. The group, he said, delivered a 150 basis points improvement in adjusted operating margin at current rates and delivered another year of 100 percent operating cash conversion. “We also returned £6.9 billion ($8.57 billion) to shareholders through dividends and share buybacks,” said Jobin in a statement.
Around 15 percent of BAT’s revenue is now generated from noncombustible products, a twofold increase since 2018, according to Jobin. “At the end of 2022, we had 22.5 million consumers of our noncombustible products,” he said. “The upward trajectory, and the momentum we have, provides a clear pathway to reaching our goal of 50 million consumers by 2030.”
While expressing satisfaction with the progress BAT had made in transitioning smokers toward less harmful nicotine products, Jobin noted that BAT could not reduce the health impact of its business by itself.
“Policymakers, regulators and public health advocates must help build the science base and create the policy frameworks necessary for adult smokers to switch to less risky alternatives,” he said.
“As a board, it is our responsibility to make sure that BAT’s own transformation continues apace.”
April 19, 2023
Glo Hyper Under Scrutiny

Photo: BAT
Italian regulators are investigating BAT and Amazon for potentially misleading advertising for the Glo Hyper X2 tobacco-heating product, reports Reuters.
According to the Italian Competition Authority, the companies have made it insufficiently clear to consumers that Glo Hyper X2 is a nicotine-based product and that it is intended for an adult audience. The agency also said it had seen the product being marketed as “nicotine-free.”
“The omission and/or deceptiveness of this essential information” in advertising could influence consumers’ decisions and expose them, “minors in particular,” to the risk of unknowingly damaging their health, the Competition Authority said.
A spokesperson for BAT said the company was committed to responsible marketing in addition to the requirements set by local applicable laws.
“We are available to cooperate with the Italian Competition Authority to ensure a swift conclusion of these proceedings,” the spokesperson added.
April 18, 2023
Illegal Levels of Liquid in U.K. Disposables

Photo: YarikL
Nearly all major disposable vaping brands on the U.K. market that are not produced by a major tobacco manufacturer contain illegal levels of e-liquid, reports Better Retailing, citing BAT testing data shared by senior wholesale sources.
In a letter sent to wholesalers seen by Better Retailing, BAT said it had commissioned an independent accredited laboratory to test Elf Bar 600 products purchased from supermarkets and independent retailers between Sept. 6, 2021, and March 7, 2023.
The evidence reportedly revealed that the tested products contained significantly more than the U.K. legal limit of 2 mL of nicotine-containing e-liquid from 2.76 mL to 3.88 mL, with an average overfill of 58 percent.
Tests performed on Lost Mary, Found Mary, IVG Bar, Klik Klak, SKE Crystal, Smok Mbar Pro and Solo disposable vapes also showed illegal levels of e-liquid, according to the report.
Together, the brands account for nearly all disposable vaping sales in independent shops by both revenue and volume.
Senior wholesale sources welcomed BAT’s efforts to “clean up” the disposable vaping market but also challenged the claims made, stating they would wait on independent testing and regulatory guidance before taking action. The sources noted that BAT would likely see its market share of the disposable vaping market increase significantly if regulators took action against its rivals.
BAT stated that the results of tests have been shared with the Medicines and Healthcare products Regulatory Authority.
March 20, 2023