- BATS US write-down brings realism
- Regulatory pressures continue
Now, more than ever, tobacco companies are in existential crisis. While cigarette revenues continue to dominate top lines, the secular trend of declining smoking rates alongside the growth of tobacco-free alternatives such as vapes has led to searching questions about long-term strategies. Queries will only get louder during 2024, after British American Tobacco (BATS) said in December that it would take a £25bn impairment charge, mostly in relation to US cigarette assets acquired from Reynolds American in 2017.
British American Tobacco, claims to want ‘to build a smokeless world’, and the writedown is a further sign that management boards realise they need to be realistic about the future trajectory of cigarette sales as global volumes continue to struggle. The big concern is how they adapt.