SHARE OF THE WEEK: BAT hit as investors spooked by vapes backlash

SHARE OF THE WEEK: British American Tobacco has lost nearly a quarter of its value this year – with investors spooked by vapes backlash

Shares in British American Tobacco have lost nearly a quarter of their value this year – with investors spooked by a backlash against vapes.

Regulators on both sides of the Atlantic have expressed concern over tobacco alternatives amid calls for flavoured products to be banned.

This is a blow for those such as British American Tobacco which are on a mission to pivot away from cigarettes towards ‘next generation products’.

To make matters worse, the maker of Marlboro and Benson & Hedges was recently fined £508m for sanctions busting, because it sold to and traded with North Korea between 2007 and 2017.

This sent shares tumbling and chief executive Jack Bowles announced his sudden departure. He was head of Asian operations at BAT for some of the period under scrutiny by US authorities.

Russ Mould, investment director at AJ Bell, said this is ‘not a pretty picture’ for new chief Tadeu Marroco, who leads a trading update on Tuesday.

‘Marroco must now put the North Korea fiasco behind the company, improve momentum in next generation products and entrench BAT’s competitive position in tobacco so it can keep generating cash, pay fat dividends, decrease borrowings and perhaps restart share buybacks,’ he said. 

Investors are likely to seek reassurance about the prospect of US laws as the Food and Drug Administration looks at menthol and flavoured cigarettes.