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BAT Shores Up US Heated Tobacco Prospects As Competition Grows

By Reuters
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BAT Shores Up US Heated Tobacco Prospects As Competition Grows

British American Tobacco has submitted an application to market its Glo Hyper device as a reduced-risk product in the United States, its first movement in years on heated tobacco in the world's biggest market for smoking alternatives.

The maker of Dunhill and Lucky Strike cigarettes had previously applied to market Glo in the US in 2021 but has yet to receive approval.

Chief executive Tadeu Marroco subsequently said that heated tobacco did not have huge potential there and BAT would instead focus on vaping.

He said that while that perspective had not changed, BAT had submitted a modified risk tobacco product application for Glo Hyper to the US Food and Drug Administration in December.

Heated Tobacco Products

It was clear that BAT's competitors would launch heated tobacco products in the market, he told Reuters by phone.

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"We also want to be prepared in case the category surprises us," he added.

If granted, the application would allow BAT to make certain health claims about Glo in its US marketing, such as that it is lower risk or reduces exposure to harmful chemicals compared with smoking.

The company is under pressure to better compete in heated tobacco, where rival Philip Morris International (PMI) has taken some 70% of the market and plans to launch its IQOS device in the US this year.

'Heated tobacco products are another area British American Tobacco is looking to expand in – although rival Philip Morris has stolen a march on the company in this market,' AJ Bell noted in a comment.

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'As the push for new rules on vaping in the UK demonstrate though, the regulatory pressure on British American Tobacco is likely to remain unrelenting.'

Partnership

Altria and Japan Tobacco International have also announced a partnership to launch a heated tobacco device in the United States.

Heated tobacco devices warm up packages of ground up tobacco but do not burn them in an attempt to avoid the harmful chemicals produced via combustion.

BAT's shares rose almost 8%, when it announced it could sell-down some of its stake in India's ITC and reported full-year results.

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