Stronger vaping rules could benefit British American Tobacco after deaths in US

The boss of British American Tobacco (BAT) expects to capitalise on stronger vaping rules after a series of deaths linked to electronic cigarettes in the US.

Jack Bowles, who has headed the group since April this year, said that the company had managed to grow its new categories segment, which is largely based on vapes, despite a slowdown in the US.

“We believe that the issues around vaping in the US should lead to a better and stronger regulatory environment in which we are well-placed to succeed,” Mr Bowles said.

New categories, which includes Vype and Vuze, grew at the lower end of BAT’s 30% to 50% target as US customers remained wary of the new technology.

“Increased investment and new product launches are delivering good new category revenue growth in the second half, despite the recent slowdown in the US vapour market,” Mr Bowles said.

Nearly 2,300 people are believed to have been taken ill after vaping in the US, while 47 have died, according to the Centres for Disease Control and Prevention. Cases have also been reported in Europe.

BAT said it had gained in market share, capturing 17.5 of the market, by value, through the Vuse family of vaping products in the US. Vype has captured 11.8% of the UK market by value, and 19.2% in France. In Canada the vape has captured 27.6% of the market.

BAT’s performance in its combustibles segment, which includes cigarette brands such as Camel and Lucky Strike, was largely in line with expectations.

“We expect to deliver a strong performance in 2019, building on the good progress we made in the first half. Our focus on our global strategic brands is delivering share gains and strong price mix in combustibles, both globally and in the US,” Mr Bowles said.

He added: “We are driving value growth in combustibles, we are investing to deliver a step change in new categories and we are transforming the business to create a stronger, simpler, more agile BAT. We are on track for a strong year.”