WVS NEWS: BAT’s Full-Year Earnings Balanced by New Categories
During the presentation of its yearly results, BAT said the vaping segment represented the largest contributor to new category usage. It reached an additional 100,000 adult consumers in 2024, taking the total to 11.9m. Overall, the company added 3.6m adult consumers to its smokeless product portfolio, bringing the total to 29.1m. These products now account for 17.5% of company revenue, up one percentage point from the previous year. The launch of a new range of innovative products in the fourth quarter has been well-received, featuring enhanced sensorial features and removable batteries in many single-use offerings.
Challenges from illicit market
Total vapour volume declined by 5.9%, with revenue falling 5.1% to £1.72bn, or 2.5% on an organic constant currency basis. The lack of enforcement against illegal flavoured single-use vapour products in the US and the ongoing flavour ban in Quebec have impacted sales. Despite these challenges, BAT maintained a 50.2% value share of the US closed-system consumables market, a decline of two percentage points from 2023.
In the US, BAT retained its leading vapour market share, despite a 3.5% revenue decline overall, or 0.8% at constant exchange rates. Combustibles volume fell by 10.1%, reflecting economic pressures affecting consumer affordability and the rise of single-use new category products. Illicit products are estimated to account for nearly 70% of the US vapour market. The US Food and Drug Administration (FDA) has increased enforcement, issuing warnings, conducting product seizures and implementing penalties. Additionally, vapour directory laws have been enacted in three states, with 11 more set to introduce similar measures by late 2025. Louisiana, the first state to implement such regulations, has already seen a decline in illicit vapour product sales, with BAT’s Vuse Alto accounting for the majority of legal volume recapture.
Smokeless category growth in South Korea, New Zealand and Japan
The Americas and Europe (AME) and the Asia-Pacific, Middle East and Africa (APMEA) regions both contributed to the company’s strong performance, delivering results in line with its mid-term algorithm. In APMEA, new category revenue rose by 1%, or 8.6% at constant exchange rates, driven by vapour growth in South Korea and New Zealand and strong heated product sales in Japan. In AME, combustible revenue increased by 3.6%, fuelled by volume growth in Brazil, Turkey and Mexico. However, lower vapour revenue in Canada, due to the prevalence of illicit single-use products, partially offset these gains.
Following Mexico’s ban on vapour product sales, BAT has ceased selling Vuse. The company believes the country’s decision is counterproductive to reducing smoking rates, as smokeless products have been linked to an accelerated decline in smoking prevalence.
Overall, revenue was down 5.2%, largely due to the sale of BAT’s businesses in Russia and Belarus in September 2023, offset by a £251m increase in new category contributions on an adjusted organic basis.
Looking ahead, while regulatory and fiscal challenges in Bangladesh and Australia are expected to impact its combustibles business, BAT remains optimistic about transitioning from investment to deployment in 2025. The company is committed to its mid-term guidance of 3% to 5% revenue growth and 4% to 6% adjusted profit from operations growth on a constant currency basis by 2026.
– Antonia Di Lorenzo ECigIntelligence staff
