British American Tobacco (BAT), the world’s #2 tobacco company, welcomed the U.S. health regulator’s step to ban popular e-cigarette flavors, saying it might comply with the new rules geared toward controlling teenage vaping.
Beneath a new policy that can go into effect in February, e-cigarette manufacturers shall be forbidden from selling pod-based e-cigarette flavors, alongside fruit and mint, in the U.S., leaving menthol and tobacco flavors solely on the market.
Tobacco producers have doubled down on vaping products in recent times to balance falling demand for cigarettes; however, a series of vaping-related deaths and concerns around a spur in teenage vaping have drawn intense regulatory investigation and hit e-cigarette sales.
Brokerage Jefferies noted earlier this week that while vaping sales would take a near-term hit from the step, the overall financial impression for the key tobacco corporations can be minimal as most users would change to menthol or tobacco, and even higher-margin traditional tobacco products.
BAT was one of many first to apply to the FDA for permission for continuing the sale of Vuse, a condition that affects all cigarette manufacturers before May 2020.
The corporate’s shares were up marginally in morning trading Friday.