British American Tobacco (BAT) shares plunged on Thursday after it reported underwhelming vape sales in the US and forecast a slowdown across the smoking industry this year.
The maker of Camel and Lucky Strike cigarettes made 0.8% less in 2024 vape sales than the previous year in its key American market.
So-called “new category” products like vapes and oral tobacco have been touted as the future of the sector, and BAT has said it wants to be a “predominantly smokeless” business by 2035.
But the “growing presence of illicit single-use vapour products” hampered its ability to sell more of its own vapes last year.
Shares in the London-listed company fell as much 9% on Thursday.
Russ Mould, an analyst at AJ Bell, said the smokeless pledge is “all very well… but it does beg the question of what’s going to replace the revenue and cash flow provided by selling cigarettes”.
Last year, vapes and other new product lines contributed less than one-tenth, at just £249 million, of BAT’s £2.7 billion profit.
In the relatively small UK market, meanwhile, the company said vape sales continued to grow.
Meanwhile, its US cigarette sales plunged 10.1%, as a fall in consumer spending pushed more people to buy discount products, rather than BAT’s premium ranges.
Chris Beckett, an analyst at investment firm Quilter Cheviot said: “Consumer companies are stuck in somewhat of a difficult environment just now.
“Consumers simply aren’t spending as they were in the aftermath of the pandemic,” he said.
Turnover decreased by 5% to £25.9 billion at the tobacco giant, while it expects that to grow by 1% in 2025.
Chief executive Tadeu Marroco said: “We are making good progress and while there is still more to do, I am certain that the investment actions taken in 2024 are the right way forward for BAT.”
