Tobacco shares tumbled on industry sales figures from consumer insights company Nielsen, which offered a bleak picture in the US for the four weeks to mid-May. Cigarette sales by value fell 6.9 per cent here according to Nielsen, and 11.2 per cent by volume. Total nicotine sales dropped 7 per cent, while the nascent e-cigarette market fared little better, with growth having slowed to 59 per cent.
A combination of commercial sense and environmental, social and governance awareness has seen institutional investment in tobacco stocks go up in smoke in recent years. British American Tobacco (BATS) and Imperial Brands (IMB) fell by 4 per cent and 6 per cent, respectively, after the figures were published. The news that alternatives to tobacco are struggling, known otherwise as ‘next generation products’ (NGP), will be of concern to the two tobacco giants, although they appear to remain at the front of the market. Imperial registered a slowdown in uptake of new technologies in the US over its first half, but NGP revenues were up 245 per cent as its vaping brand ‘blu’ penetrated Europe and Japan.
BATS has also been investing heavily in alternative products, in the face of declining tobacco demand and mounting US regulation. At its 2018 full-year results, BATS increased NGP revenues by 95 per cent and edged ahead of its £900m target, posting turnover of £901m. But the group saw its volumes fall 12.5 per cent and sales drop 7.7 per cent over Nielsen’s four-week period.
