Tobacco giant shares burnt by menthol ban report

Cornelia Mascio
Novembre 15, 2018

"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.

Analysts at Barclays estimate that United States sales of menthol cigarettes account for around 25% of BAT's annual underlying earnings and 11% for Imperial.

The Food and Drug Administration (FDA) will issue a ban on the sale of fruit and candy flavoured electronic cigarettes at convenience stores to tackle the recent surge in teenage use of e-cigarettes, according to an agency official.

The FDA could ban flavors of tobacco products, including menthol, but the Act doesn't allow the FDA to tobacco products immediately, according to Height.

It could take a year or more for a rule banning menthol to be finalized, and then another year for it to be enforceable in the marketplace.

Earlier this year, San Francisco passed a prohibition against the sales of menthol cigarettes and flavored e-cigarettes.

The Wall Street Journal followed up with its own report Friday that said the FDA could propose a ban on menthol cigarettes.

"It must be emphasised that at this stage these reports are still rumours and they make it clear that it would take some time to draw up the ban and then implement it", added Ian Forrest, investment research analyst at The Share Centre.

Tobacco companies would probably mount a legal challenge that would delay the process, Gerry Gallagher, an analyst at Deutsche Bank, also said.

Menthol cigarettes account for around 35 percent of total industry volume in the U.S., Herzog said.

For years, the tobacco industry has heavily marketed menthol cigarettes to African-Americans via "culturally tailored advertising images and messages", reported (an example of an ad is pictured above, far left).

"While many menthol smokers would likely move over to non-menthol products, it would still be a major blow".

BAT shares have lost almost 38 percent in value this year so far.

Imperial Brands plc declined as much as 5%.

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