New tobacco and nicotine products weaken tobacco companies in the stock market

British American Tobacco’s announcement of a €29bn write-down of its US cigarette brands showed the tobacco giant’s fragility. The stock market devaluation of major tobacco companies in 2023 has investors questioning the tobacco industry’s ability to complete its transition to new tobacco and nicotine products.

British American Tobacco (BAT) CEO Tadeo Marocco’s statement on December 6, 2023 unnerved the markets. It has announced that smokeless tobacco products and nicotine products (e-cigarettes, nicotine pouches, heated tobacco) should account for only 50% of its turnover in 2035, while rival Philip Morris International (PMI) says they will account for two-thirds of its revenue. from 2030.

On the same day, Tadeu Marocco also announced a write-down of BAT’s USD 31.5 billion (€29 billion) assets attributable to its cigarette brands in the United States (1). BAT actually acquired Reynolds American for $49 billion (€45 billion) in 2017 to take over the Camel and Newport brands. Although currently very profitable, the lifespan of these American cigarette brands has actually been estimated at 30 years, a first in the history of the tobacco industry. This can be explained mainly by the decline in smoking prevalence in the United States from 21% in 2005 to 11.5% in 2021 and the disinterest of young consumers in cigarettes in favor of new nicotine products.

BAT and other tobacco companies suffer from stock market fluctuations

This announcement was immediately followed by an 8% drop in the price of BAT, representing a loss of $5 billion (€4.6 billion)(2). It also led to declines among its rivals, down 3% for Altria and 2% for Philip Morris International (PMI)(3) and Imperial Brands. For the whole year, BAT’s share market value loss widened to 31%. 2023 also significantly affected the stock market value of other tobacco multinationals that make up the “Big Four” (PMI, Japan Tobacco International and Imperial Brands).

Stock market value of tobacco multinationals

(Reuters Graphics)

So it seems that the markets are beginning to approve the various strategic choices of the major tobacco companies. BAT would be penalized by both its debt in the cigarette sector and the lag compared to the PMI in the heated tobacco segment. The proliferation of disposable e-cigarettes (“pods”) has also undermined its economic model of e-cigarettes based on cartridges (“pods”). The emergence of countless small manufacturers of tobacco products has placed tobacco companies in the presence of unusual competition, although they have long operated in a market closed to competition, which until now has facilitated trade deals and increased tobacco prices. products (4).

Uncertainty in the markets for new tobacco and nicotine products

PMI, which has 70% of the heated tobacco market compared to 18% for BAT, and became the market leader in snus and nicotine pouches with the acquisition of Swedish Match, appears to be a better performer at this point in its declared transition to new tobacco. and nicotine products. However, smoked tobacco products continue to account for the majority of PMI’s revenue. The heated tobacco strategy is no less risky and could at any time encounter regulatory or fiscal tightening that would significantly curtail this market. An illustration of this is the ban on flavorings for heated tobacco sticks in the European Union.

Imperial Brands announced in 2021 that it will exit new tobacco and nicotine products, where it is lagging, and focus on conventional tobacco products. The stock market value of this group is holding up as best it can and is significantly lower than PMI or BAT, but this refocusing strategy could prove to be less risky, even if it appears to be time limited.

E-cigarettes – disposable or not – nicotine pouches and other new products could also face regulatory restrictions, as currently seen in Australia and the UK, or even outright bans(5). These numerous uncertainties contribute to a certain reluctance among investors towards multinational tobacco companies, fueled by the ethical movement of financial losses in sectors that are considered harmful. In France, the new Socially Responsible Investment (SRI) framework includes, for example, a social criterion that excludes the tobacco industry from investment(6). These regulatory developments also explain the tobacco industry’s renewed offensive against the Framework Convention on Tobacco Control (FCTC), a few weeks before its tenth Conference of the Parties (COP 10)(7), while the World Health Organization (WHO) has just renewed its warning on e-cigarettes.

Keywords: British American Tobacco, Philip Morris, Japan Tobacco Imperial, Imperial Brands, tobacco industry, stock market, stock market value, new nicotine products, finance

©Tobacco Free Generation


(1) Karaian J, The cigarette maker slashed the value of Camel and other American brands by $31 billionThe New York Times, published December 6, 2023, accessed December 19, 2023.

(2) CNN/Reuters, British American Tobacco reduced the value of American cigarette brands by $31.5 billionCNN Business, published December 6, 2023, accessed December 19, 2023.

(3) Sherman N, Tobacco giant sees sunset for US cigarette businessBBC News, published 6 December 2023, accessed 19 December 2023.

(4) Rumney E, Big Tobacco transition under fire as WHO targets vapingReuters, published 14 December 2023, accessed 19 December 2023.

(5) Donnellan A, Big Tobacco’s smoke-free push may soon burn outReuters, published 15 December 2023, accessed 19 December 2023.

(6) ISR label supported by public authorities, label benchmarkDirectorate General of the Ministry of Finance, published on 12 December 2023, consulted on 19 December 2023.

(7) FCTC COP 10, scheduled to take place in Panama in November 2023, has been postponed to 5-10 February 2024.

National Committee Against Smoking |

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