Tobacco Shares Plunge on Possible U.S. Ban of Menthol Cigarettes

Cigarettes

"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.

"BAT is the most exposed name to the potential risk", wrote Richard Taylor, an analyst at Morgan Stanley who estimates that U.S. menthol cigarettes account for 25% of total earnings. More than 2 million middle and high school students were current users of e-cigarettes in 2017, the FDA said, and e-cigarettes were the most commonly used tobacco product by youth.

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.

E-cigarette makers argue the devices help adult smokers give up cigarettes - potentially saving them from related illnesses - by giving a nicotine fix without the smoke and smell of combustible cigarettes.

Tobacco stocks are getting slammed on Monday following a report the Food and Drug Administration is going after menthol cigarettes, which the investment firm Jefferies says represents 34% of the total U.S. cigarette market.


While the first batch of restrictions may not include menthol, the agency also is considering a ban on menthol flavoring that would extend to ordinary cigarettes, not just e-cigarettes. It's unclear how long it would take for such a plan to take effect and tobacco companies could drag out the process by challenging a ban. Traditional products make up most of its revenue.

After the announcement of the intentions of the BAT shares fell almost 9 percent.

As early as this week, the FDA is expected to announce a ban on the sale of most flavored e-cigarettes in convenience stores and gas stations. The company didn't immediately respond to a request for comment.

Imperial Brands Plc declined as much as 5 percent.

According to analyst Michael Lavery, menthol cigarettes constitute 55 to 60 percent of the total volume of the purchased cigarettes, 25 per cent of global profits. The proportion is about 20 percent for Altria, according to the firm.

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