Tobacco Gets Toasted

Image source:

What's going on?

US regulators are poised to crack down on the sale of flavored e-cigarettes (a.k.a. vapes) this week and theyre eyeing menthol cigarettes, too (tweet this). Shares of smoke king British American Tobacco smoldered, falling 11% on Monday.

What does this mean?

The US Food and Drug Administration (FDA) is expected to ban most vape sales in convenience stores and gas stations, having previously declared youth vaping an epidemic. Under the new rules, flavored e-cigs can only be sold online or in specialist vape stores, which are better at checking customers ages. Industry leader Juul is already said to be halting sales of teens choice flavors like mango and cucumber in all physical stores. But the old timers of the tobacco industry wont be celebrating too hard: the FDA is also lining up a full-scale ban on menthol cigarettes…

Why should I care?

For markets: Menthol makers go up in smoke.


Around one in four cigarettes sold in the US are menthol and theyre typically marketed to teens, women, and ethnic minorities. With gateway e-cigs less accessible, the FDA may be concerned that youngsters will turn to highly addictive and dangerous menthols instead. British American Tobacco, which spent $50 billion buying the biggest menthol brands in the US last year, counts on menthol smokers there for 25% of its profit hence investors razing its shares down to four-year lows on Monday.



The bigger picture: Vaping is the new smoking.


E-cigarettes are now the most commonly used tobacco product among teens. Theyre so ubiquitous that some high schools have banned flash drives (which look similar) to try and keep them off campus. But e-cigs dont come with the same warning labels as cigarettes some teens arent aware that vapes contain nicotine, even though one cartridge contains the equivalent of a pack of traditional smokes. Vaping teens may soon struggle to get their hands on e-cigs but theyre already much more likely to take up regular cigarettes, menthol or not. There may be hope for Big Tobacco yet…

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Oil (Wont) Be There For You

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.