British American Tobacco on track to make more money as sales of vapes rise

The company said in a trading update that it had about 40% vaping market share across key markets like the US and the UK with its Vuse products

British American Tobacco (BAT) says it's on track for significant profits from its vaping products in the latter half of the financial year, outpacing the first.

A recent trading update showed that the tobacco giant has captured around 40% of the vaping market share in pivotal markets such as the US and UK through its Vuse brand. They did note, however, a 2% decline in global tobacco industry volumes year-on-year due to a shift away from traditional cigarette smoking.

BAT Chief Executive Tadeu Marroco commented on the success in "new category" products, heralding increased profitability. Despite projections indicating a slight dip in overall sales for the year to £26.3bn, BAT's sale of Vype, Glo, and Vuse are anticipated to see a robust 9% increase in sales to £3.6bn.

The company said that revenue and adjusted profit for the year met previous forecasts, aligning with expectations for low single-figure organic growth.

Mr Marroco highlighted BAT’s strategic pivot towards vapes and oral products, stating this trajectory is making "progress". Aimed at transforming BAT into a "predominantly" smokeless enterprise by 2035, this strategy has already boosted shares by 30% over the past year.

Still, BAT has seen a 9% drop in US industry volumes since the year's commencement, attributing the decrease to sustained economic strains and the influence of unregulated single-use vapor products. The trading announcement arrives at a time when anti-smoking laws and levies are being intensified globally by governments for public health reasons.

UK smokers and vapers are set to cough up more cash as Chancellor Rachel Reeves announces a new vaping tax and a hike in tobacco duty to "maintain the incentive to give up smoking". The flat rate duty on all vaping liquid will kick in from October 2026.

In addition, the Tobacco and Vapes Bill has been tabled in Parliament, aiming to gradually increase the legal age for tobacco purchase, effectively banning anyone born after January 1 2009 from legally lighting up. However, the Government has backtracked on potential plans to ban smoking in pub beer gardens.