Tobacco stocks run out of puff over US menthol crackdown
Shares in British American Tobacco went up on smoke on Monday after it emerged the US authorities were considering banning menthol cigarettes.
British American Tobacco
2,360.00p
16:45 23/04/24
FTSE 100
8,044.81
16:49 23/04/24
FTSE 350
4,424.29
16:59 23/04/24
FTSE All-Share
4,378.75
17:14 23/04/24
Imperial Brands
1,805.50p
16:34 23/04/24
Tobacco
26,773.81
16:59 23/04/24
According to the Wall Street Journal, the US Food and Drug Administration is concerned that the minty taste appeals to younger smokers, encourages addiction and makes it harder to give up.
It is therefore considering banning the popular cigarettes, which account for around 36% of the US market, according to analysis by Barclays.
Any ban is unlikely to come into action for at least two years, but that did not stop investors piling out of BAT, owner of Lucky Strike and Dunhill. BAT re-entered the US market last year after a 12-year absence through the $47bn acquisition of Pall Mall-owner Reynolds American, and is a leader in menthol cigarettes. According to Deutsche Bank estimates, around 20%-25% of group profits come from the US menthol cigarettes.
Shares in BAT, one of the FTSE 100’s biggest, were down 9% at 3,033p by mid-morning in London. Earlier in the session they had tumbled 11% to trade below 3,000p for the first time in almost five years.
Rivals also felt the pinch, with Imperial Brands - owner of John Players Special and Gauloises - down 3% at 2,656p.