Daily Management Review

Fitch expects slowdown in tobacco market due to vaping ban


10/04/2019


The ban on electronic cigarettes in a number of countries around the world, which was introduced after testing a new generation of tobacco products, could lead to a decrease in growth in the sector, Fitch rating agency reported.



Mike Mozart
Mike Mozart
"We expect that a recent inspection of a new generation of tobacco products, which included a ban on the sale of electronic cigarettes in some countries, states and cities in the United States, will slow down the sector’s growth," the agency said.

In the short term, Fitch expects significantly slower growth in the next-generation tobacco market.

At the same time, in the long run, the consequences of the bans remain uncertain, as this can bring profit to large companies by reducing competition from smaller producers.

Fitch forecasts that one of the world's largest tobacco producers, Philip Morris, will be less affected by regulatory control, as the company focuses on producing next-generation tobacco products that work without overheating.

It is specified that Philip Morris has received approval for the sale of this product by US regulators.

British American Tobacco, according to the agency, is more influenced by restrictions in the field of electronic cigarettes. Nevertheless, as the agency reports, the company confirmed that by 2024 it expects profit of 5 billion pounds (approximately $ 6.1 billion).

In September, Walmart announced cessation of sales of electronic cigarettes in the United States due to the difficulties of state and local regulation.

Also in September, the U.S. Centers for Disease Control and Prevention (CDC) said it had documented the twelfth death from vaping, with hundreds of Americans complaining about problems in this regard.

source: fitchratings.com






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