British American Tobacco says the widespread sales of disposable, flavored vaping products lacking the regulatory authorizations required to be legally sold in the U.S. are netting billions of dollars every year and are eating into the market share of BAT’s legal products.
The company said it is optimistic U.S. President Donald Trump’s new administration can tackle a vast market for illegal vapes in the United States, CEO Tadeu Marocco said on Thursday.
“Hopefully with the new administration there is a new opportunity to think about enforcement,” he said. “I think they will need to restore order… and actually I am optimistic that over time this issue can be addressed by the new administration.”
BAT sells its VUSE brand vaping products in the U.S. through R.J. Reynolds Vapor Company (RJRVC), an operating company of Reynolds American Inc. (Reynolds American), the BAT Group’s U.S. subsidiary.
For 2025, BAT expects just 1% revenue growth. BAT shares fell more than 9%, wiping about $6 billion off its market capitalization in its worst day since 2020.
Rae Maile, analyst at Panmure Liberum, said the drop was driven by the impact of a Canadian settlement on BAT’s prospective earnings. The company on Thursday said it would take a 6.2 billion pound ($7.74 billion) hit from a Canadian lawsuit and warned of “significant” headwinds in Bangladesh and Australia in 2025, sending its shares down over 7%.
Across the industry, there is growing anticipation that Trump or others in his government could take some kind of action. But some established players also worry that changes could result in currently illicit players gaining legal access to the world’s largest market for smoking alternatives.
