On Friday, British American Tobacco (BAT) shares dropped more than 2 % in light of the US Food and Drug Administration (FDA) banning the sales of six Vuse Alto vape flavours in the U.S.
BATS shares are down 3.5% and are worth 2,448p at the time of writing.
On Thursday, the FDA stated that it has issued a ban on three menthol and three mixed-berry vape flavours in the U.S. These Vuse Alto products are being sold by BAT´s subsidiary, R.J. Raynolds.
Now, BAT is not allowed to market or sell these flavours within the U.S. According to the FDA statement issued on Thursday, these vapes did not meet the FDA Protection of the Public Health standards.
More specifically, the FDA stated that these six flavours should be banned as they do not seem to be helpful in either reducing the amount of cigarettes consumed by adults who already smoke or in making these adults switch from cigarettes to vaping.
Vuse Alto is the main vaping product sold by BAT in the US. The newly banned menthol flavour alone accounts for up to 75% of all of BAT´s US sales, said Jefferies analyst Owen Bennett in a comment to Reuters.
“Vaping and e-cigarettes—so-called ‘next-generation products’—were the industry and British American Tobacco’s answer to increasingly tight restrictions on the sale of cigarettes,” said Russ Mould, AJ Bell Investment Director, in a comment for UK Investor Magazine.
“If regulators start clamping down hard in these new areas too, it will raise questions about the sustainability of the business in the decades to come,”, he continued.
