Advertise with fastmoving.co.za
 
 

The US Food and Drug Administration proposes to ban menthol cigarettes, which make up 25% of BAT’s US sales.
The US Food and Drug Administration proposes to ban menthol cigarettes, which make up 25% of BAT’s US sales.

Threat of US menthol cigarette ban knocks BAT down 11%

RETAILER NEWS

By Robert Laing - Nov 12th 2018, 13:39

British American Tobacco’s (BAT) share price plunged 11% to R555, wiping R176bn off its market capitalisation, on a report the US government is considering banning menthol cigarettes. 

The Wall Street Journal reported that the US Food and Drug Administration (FDA) plans to pursue a ban, citing senior agency officials.

Menthol cigarettes account for about a quarter of BAT’s US cigarette sales, making it a bigger casualty of the potential ban than its competitors Altria and Imperial Brands.

“The FDA concluded in 2013 that menthols are harder to quit and likely pose a greater health risk than regular cigarettes. The agency said use of the cigarettes, which are flavoured with the compound menthol, was likely associated with increased smoking initiation by youth and young adults, possibly because menthol helps reduce the throat irritation caused by cigarette smoke,” the Wall Street Journal wrote.

When BAT stepped up its presence in the US last year by acquiring the 58% of Reynolds it did not already own for $50bn, it listed its menthol cigarettes as a key attraction.

“Reynolds is well-positioned as the number two player in the US market, with three out of the four top-selling cigarette brands and the benefits from the Lorillard acquisition already evident,” BAT said in January 2017.

“Reynolds has a 34% cigarette market share, with Newport the leading brand in menthol, Pall Mall the leading value brand and Natural American Spirit, the fastest-growing premium brand. Reynolds’ American Snuff subsidiary also has a 33% share of the growing moist-snuff segment, led by its Grizzly brand.”

Dow Jones quoted analyst firm Jefferies saying it would require a lengthy evidence-gathering process to get the ban through US courts.

“Jefferies notes previous similar proposals struggled due to a lack of data over the harm caused by menthol cigarettes and the high requirements of ‘conclusive’ evidence,” Dow Jones reported.
Business Live 

Related News

Transforming the customer retail experience with future fit technology
26/06/2019 - 09:19
Although the South African retail sphere is currently hindered by a slow economy and weak consumer confidence, technology is presenting opportunities to radically transform the customer experience and boost bottom line sales.

New Look losses mount as Brexit, rain keeps shoppers away
26/06/2019 - 09:03
British fashion chain New Look reported a bigger annual pretax loss, hurt by a large charge, while Brexit woes and rainy weather kept many shoppers out of its stores.

Pick n Pay and FoodForward SA aim for 2 million meals with Mandela Day Food Drive
25/06/2019 - 12:57
Pick n Pay and FoodForward SA have launched their third annual Mandela Day Food Drive and invite all South Africans to contribute towards the ambitious goal of collecting 500 tonnes of food – enough to produce two million meals.

Woolworths Beauty goes 100% vegan
25/06/2019 - 09:08
Woolworths is driving the vegan lifestyle into the mainstream in South Africa with its announcement that its WBeauty ranges are 100% vegan. This is in step with worldwide trends, where more and more consumers are turning to veganism, which excludes the consumption of all animal products and products with animal-derived ingredients, as a more ethical lifestyle that is gentler on the Earth.

France's Carrefour takes steps to exit China with Suning.com deal
24/06/2019 - 15:02
Carrefour, Europe’s largest retailer, took a decisive step on Sunday towards a full exit of the Chinese market by selling a majority stake of its activities in the country to Suning.com.