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Imperial Brands faces "challenging" US vape market

The tobacco company is facing increasing US regulatory scrutiny around next generation products in the US
September 26, 2019

Shares in Imperial Brands (IMB) tumbled after the company said that the market for next-generation products (NGPs) has been “challenging” in the US, with net revenue growth of around 50 per cent expected for NGPs this year, below previous expectations. Group net revenue for the year to September 2019 is now expected to grow at around 2 per cent, with EPS expected to be broadly flat at constant currency. 

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The US NGP market has “deteriorated considerably” over the last quarter due to increased regulatory uncertainty and an increasing number of wholesalers and retailers not ordering or allowing promotion of vaping products. Management was suitably distressed, but added that NGPs still present a “significant opportunity” alongside traditional tobacco, and that investment in NGPs will continue. In May, the company stepped up engagement and promotion around its blu vapour brand in the US, which resulted in some custumer take-up, “albeit less than expected”.