Cigarette Companies' Shares Fall As US Ponder Menthol Ban

Lloyd Doyle
November 15, 2018

It also said it cracked down on 1,300 retailers who illegally sold e-cigarettes to minors.

"Proposals to ban menthol cigarettes in the USA have been for the table for many years and we will continue to engage with the FDA on the topic", said spokesman of Imperial Brands. Menthol products sold in the USA account for about a quarter of the company's earnings.

Last year, BAT re-entered the USA market after a 12-year absence with the $47bn acquisition of Reynolds, owner of brands including Pall Mall, Newport and Camel, in a move that created the world's biggest tobacco company and was expected to speed up the development of e-cigarettes and vapes.

FDA commissioner Scott Gottlieb is poised to announce a ban on most flavored e-cigarettes at tens of thousands of convenience stores and gas stations across the country this week as well as release a proposed ban on certain menthol cigarette products.

However, it should be noted that the development of the norm prohibiting menthol cigarettes, you may need at least a year, and another year to the ban came into force. Clove cigarettes were previously taken off the market, and now the agency is taking a tougher approach to alternatives, too.

The potential menthol ban won't have a near-term effect on the markets, according to analysts.

The same year, the FDA also said that menthol cigarettes pose a larger health risk to the public than traditionally-flavored brands because they tend to be more hard for users to quit.

A ban on menthol or other tobacco products is unlikely to occur before 2022, and the tobacco industry would likely slow down the enaction of any ban through litigation, Miller said. Jefferies analyst Owen Bennett said such a move is improbable and would take years to implement.

It also highlights that despite the move towards vapour and heated-tobacco products, BAT is still heavily reliant on its cigarettes business.

British American Tobacco fell 9% to £30.15 while Imperial Brands declined 3.8% to £36.44 on the speculation. The Winston maker gets about 15 percent of earnings from menthol brands such as Kool and Salem in the US, according to Jefferies.

The proposal is part of the FDA's renewed crackdown on nicotine products, including e-cigarettes, the New York Times reported.

Newport is BAT's largest menthol brand and accounts for about 40 percent of USA sales, according to Duncan Fox, an analyst at Bloomberg Intelligence.

According to reports, the regulatory board might submit the proposal to ban traditional menthol cigarettes as early as this week.

Other reports by Iphone Fresh

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