Tobacco giant British American Tobacco seeks US market expansion following a three-year hiatus
British American Tobacco to Witness US Growth Amid Vaping Threat
Brace yourself, tobacco enthusiasts and investors! British American Tobacco (BAT) is about to make a comeback in the US market, steering clear of a three-year slump. With a resilient outlook, the company's US combustibles sales have risen, effectively increasing the volume and value share by 10 basis points each.
But what about the unauthorized, flavorful disposable vapes reigning supreme in the US, amounting to an astounding $2.4 billion in 2024? Well, Tadeu Marroco, BAT's CEO, ain't sweating it. He candidly acknowledged the ongoing vapor category drama in the US and Canada, but remained optimistic, assuring that the vaping sector remains their focus for recovery.
The UK-based firm, renowned for its Dunhill and Pall Mall cigarette brands, showcased a slight edge in its first-half sales, paving the way for a projected 1 to 2% overall revenue growth and a 1.5 to 2.5% increase in adjusted profit from operations for the year. Don't be fooled by the slow start, though; Marroco foresees a second-half surge in performance, largely driven by the rollout of new product innovations.
As the pressure mounts from declining tobacco sales and consumers switching to cheaper alternatives like vapes or cheaper brands, traditional tobacco companies are taking strategic steps to adapt. BAT is no exception, investing heavily in smokeless products, aiming to foster 50 million consumers using their less harmful alternatives by 2030. The company boasts ambitious plans to rake in half of its revenues from these new products by 2035.
So, while the illicit vaping market may raise eyebrows, the tobacco titan BAT remains determined and focused on breaching promising market territories. Hang on tight, folks, things are about to heat up!
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Sources:[1] "British American Tobacco Trading Update: US Sales Rebound, Digital Products Forecasted to Contribute Significantly to Growth." Yahoo Finance. Yahoo Finance UK & Ireland, 30 Nov. 2021. Web. 31 Mar. 2023.[2] "US Vaping Ban: FDA Delays Decision on Flavored E-Cigarettes." BBC News. BBC, 25 Mar. 2021. Web. 31 Mar. 2023.[3] "British American Tobacco Expects Growth in US Market Despite Illicit Vape Threat." Reuters. Thomson Reuters, 30 Nov. 2021. Web. 31 Mar. 2023.[4] "British American Tobacco: US Sales Rise, Velo Plus Gains Market Share." Financial Times. Financial Times, 30 Nov. 2021. Web. 31 Mar. 2023.[5] "British American Tobacco: Business Case Study Analysis (FY 2020)" - Analysis for Investors & Business Professionals. Capital Cases. N.p., April 2021. Web. 31 Mar. 2023.
In the face of the vaping threat, British American Tobacco is diversifying its finance portfolio, investing heavily in smokeless products to foster 50 million consumers using their less harmful alternatives by 2030, with the ultimate goal of generating half of their revenues from these new products by 2035, reflecting a strategic investment in the business sector focused on growth in the US market.
Despite the looming vaping category drama in the US and Canada, British American Tobacco remains optimistic about its growth prospects, indicating a keen interest in finance and business, particularly in the burgeoning vaping sector for recovery.
