Thursday , August 11 2022

Tobacco stocks threatened by ban on menthol cigars


The US Food and Drug Administration (FDA) may announce a ban on menthol cigarettes this week, according to CNBC sources that have caused tobacco companies to crash in stock markets.

According to a senior member of the FDA CNBC portal, this measure, which Scott Gottlieb's agency can announce, "will include electronic cigarettes to control pandemic levels," among adolescents. .

A senior FDA official said last week that the agency is considering ways to limit menthol to traditional cigarettes.

That way, it will be a step to remove or strictly limit the use of popular cigarettes that the FDA has for some time considered.

More aggressive regulation of Nicotine was an important priority for Scottish Director of Government.

Stocks of British American Tobacco (BAT) fell 10.6 percent to 966 pounds on the London Stock Exchange.

Authors of Marlboro's Altria fell 3.55% to $ 61.20.

"BAT is the name most exposed to potential risk," says Richard Taylor, an analyst at Morgan Stanley, who estimates that US menthol cigarettes account for 25 percent of the company's total profit.

BAT spokesman Simon Cleverly said in a statement, "We have not found a change in the FDA to suggest that the FDA will escape from the existing multi-year comprehensive rulemaking process on flavors of tobacco products, including menthol.

If the agency "wants to regulate tobacco with menthol, this kind of proposal will have to go through the regulatory process for years," he said.
He added.

Potential restrictions strongly prevent the FDA from smoking to young people. Tobacco flavored cigarettes have previously been removed from the market, and the agency is now taking a more rigorous approach to alternatives.

FDA is targeting flavored tobacco products. Research shows that teenagers who smoke with menthol consume nearly twice as much every week than users who smoke menthol.

Not every analyst thinks there is a ban. Jefferies analyst Owen Bennett said the move is not easy to take and will take years to implement.

Deutsche Bank analyst Gerry Gallagher said the tobacco companies would face legal problems delaying the process.

The decline in the BAT stock shows that Lucky Strike's manufacturer is expanding into steam and hot cigarette products, but the main business remains tobacco.

Imperial brands fell 2.63% to $ 34.61. According to Jefferies, Winston manufacturers earn about 15% of the revenue of menthol brands like Kool and Salem in the US. According to the company, the proportion of Altria is about 20%.

Imperial will continue to interact with the FDA on menthol cigarettes, but will not comment until there is an official update from the agency, a spokesman for Simon Evans said in an e-mail.

According to Bloomberg Intelligence analyst Duncan Fox, Newport is the largest menthol brand in BAT and accounts for about 40% of US sales.

Tobacco companies received an exception in 2009 for menthol, which is prohibited by other federal spices.

BAT stocks fell 40% this year. It fell the most in at least 20 years. They have decreased only twice in the last 19 years.

Information from Bloomberg.

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