British American Tobacco share price: where next after US clampdown on vaping?

The tobacco company is set to release a trading update next week, with investors eager to see how US regulators' clampdown on vaping products will impact sales.

British American Tobacco (BAT) will release a trading update on October 15, with investors eager to see how US regulators' clampdown on vaping products will impact sales.

Over the last quarter, BAT’s rival Imperial Brands admitted that vaping and e-cigarette sales have ‘deteriorated’ due to increased regulation, with Massachusetts opting to temporarily ban the sale of e-cigarettes.

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BAT adamant its vaping products are safe

Back in September, BAT insisted that its vaping products did not contain vitamin E acetate or tetrahydrocannabinol (THC), with both substances linked to respiratory-related illnesses that have caused the deaths of 11 people in the US.

‘Every single ingredient and component in these products has been scrutinised by our toxicologists for their suitability for vaping,’ BAT said in a statement.

‘From the FDA's statements we have seen, these tragic events appear to be a new phenomenon linked to liquids that were not sourced from reputable manufacturers and which contained ingredients, including THC and vitamin E acetate, which we do not use.’

BAT slashes thousands of jobs as it shifts to vaping

As the tobacco industry sees cigarette sales continue to decline, further driving its transition to next-generation products (NGP) like vaping and e-cigarettes, companies in the sector are looking to cut costs.

Last month, BAT announced plans to cut 2,300 jobs by 2020 as the company repositions itself to focus more on non-tobacco related products, while its rival Imperial Brands is looking to raise £2 billion from its asset divestment programme by May 2020.

Despite the myriad of challenges facing the company, BAT has performed relatively well compared with its peers, which is reflected in its share price rallying more than 13% since January. The FTSE 100 company has also outperformed the market, with the blue-chip index up 6% on a year-to-date basis.

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