Key points:

• BAT Malaysia will withdraw its Vuse vapor products from the market by Q3 2025 to comply with Malaysia’s new public health tobacco law.
• The company expects minimal financial impact from the exit, as it shifts focus to growing its combustible cigarette business.
• In February 2025, BAT had reported steady FY2024 results and expressed optimism for 2025, highlighting resilience in its core combustible segment.

British American Tobacco (BAT) Malaysia has announced that it will begin phasing out its Vuse-branded vapor products from the Malaysian market in the 3rd quarter of this year. The move is in anticipation of new regulatory requirements under the Control of Smoking Products for Public Health Act 2024 (Act 852).

In a filing to Bursa Malaysia on Monday, BAT Malaysia stated, “In order to comply with the new regulatory requirements for vapor products as set out in Act 852 and its regulations that will take effect on Oct 1, 2025, the company will be transitioning out its current range of Vuse products in the 3rd quarter of 2025.”

The Vuse product line is the world’s top-selling vapor brand by market share and represents BAT Malaysia’s sole offering in the vape category. The company emphasized that the exit is not expected to significantly affect its financial performance for the fiscal year ending December 31, 2025, and that it remains focused on delivering “combustible value growth.”

This decision follows heightened regulatory scrutiny and enforcement activity around e-cigarettes and vape products in Malaysia. Act 852, which came into effect in October 2024, includes a phased rollout of regulations, including a retail display ban, restrictions on youth access, and content limits for e-liquids. The rules on nicotine limits and graphic health warnings are scheduled to take effect on October 1, 2025.

Health Minister Datuk Seri Dr Dzulkefly Ahmad last week said the government would intensify enforcement in 2025, underscoring the need for industry compliance and public health safeguards.

The announcement comes just months after BAT Malaysia reported its financial results for the fourth quarter and full fiscal year 2024. In February, the company posted a 2.7% revenue increase in Q4 2024, reaching RM653.0 million (US$150.2 million), and a 20% rise in operating profit, which totaled RM76.6 million for the quarter.

For the full year, revenue edged up to RM2.315 billion, a modest 0.2% increase over FY2023. Despite this, profit from operations dipped 0.8% year-over-year, primarily due to lower margins in the vapor segment and slight pressure in the legal combustible market.

“The combustible business remains resilient despite the changing market trends,” said BAT Malaysia Managing Director Nedal Salem in a February statement. “We are optimistic of the company’s prospects for 2025, backed by Dunhill, the No. 1 brand in Malaysia, with 60 years’ presence as the top cigarette brand in the country.”

Salem reaffirmed that the company would focus on growing its premium and value-for-money combustible cigarette segments, particularly Dunhill, as part of a broader “multicategory” business strategy.

In its February earnings release, BAT Malaysia welcomed intensified enforcement actions against the tobacco black market. According to the company, black market penetration dropped from 56.4% in January 2024 to 54.3% in November 2024, thanks to stepped-up efforts by the Royal Malaysian Customs Department.

While acknowledging progress, the company urged continued government vigilance. “We encourage the government to continue to focus its attention and resources to address the issue in 2025,” said Salem.

On the regulatory front, BAT Malaysia has expressed support for Act 852 but called for clearer implementation guidance. “We urge the Ministry of Health to continue to have open dialogues with the industry during this transition period,” Salem said, “to ensure the industry is clear on the guidelines and requirements in order to comply with the new regulations, as well as ensuring there is no disruption to the market.”

BAT Malaysia’s decision to exit the vapor category—at least temporarily—reflects growing compliance burdens and regulatory uncertainty for alternative nicotine products in Southeast Asia. The company’s move stands in contrast to BAT’s broader global strategy of investing heavily in “New Category” products, including vaping products and heated tobacco devices.

While BAT globally has pushed to shift its revenue mix toward reduced-risk products, the Malaysian subsidiary appears to be prioritizing regulatory compliance and stability in its core cigarette business for now.

The announcement could have ripple effects in Malaysia’s broader vapor industry, where some local and imported brands may struggle to meet the stringent requirements of Act 852—including limits on nicotine content, packaging regulations, and distribution restrictions.

BAT Malaysia also faces increasing competition from illicit and unregulated vapor products. Industry analysts note that without harmonized and enforceable standards, black market players may fill the gap left by compliant operators like BAT.

As Malaysia heads toward full enforcement of Act 852, BAT Malaysia’s shift away from vapor sales may offer a preview of how multinational nicotine companies will adapt in jurisdictions with complex or evolving tobacco regulations. The company’s emphasis on growing premium combustible brands reflects a cautious, compliance-driven approach in an increasingly scrutinized market.

Whether BAT Malaysia will reintroduce compliant vape products post-2025 remains to be seen. For now, the company’s strategy hinges on preserving market share in combustibles, maintaining fiscal discipline, and navigating a shifting regulatory landscape.