BAT's shares fall on possible ban in the US

CRACKDOWN The FDA is looking to ban menthol cigarettes in the US

British American Tobacco Plc, whose products include Newport, fell the most in more than four years in London, destroying 8.4 billion pounds ($10.8 billion) of market value.

Menthol cigarettes account for about a quarter of BAT's USA cigarette sales, making it a bigger casualty of the potential ban than its competitors Altria and Imperial Brands.

The Food and Drug Administration (FDA) is expected to make a landmark move against the tobacco industry this week by seeking a ban on the sale of menthol cigarettes and flavored e-cigarettes.

The FDA could ban flavors of tobacco products, including menthol, but the Act doesn't allow the FDA to tobacco products immediately, according to Height.

Fellow tobacco stock Imperial Brands PLC (LON:IMB) fell 4.1% to 2,637p, although it has a much smaller presence in the United States menthol cigarette market.

The potential menthol ban won't have a near-term effect on the markets, according to analysts.

The former has taken a bigger hit as it owns the Newport brand of menthol cigarettes after acquiring Reynolds American a year ago.

FDA plans to ban menthol cigarettes and flavored e-cigarettes.

The curbs on the nascent e-cigarette industry comes as federal officials have become increasingly alarmed about growing use among young people. The ban on menthol cigarettes is the result of an FDA study that concluded that menthol cigarettes are more hard to quit and may pose a more significant health risk than unflavored varieties. The FDA may impose limits on the sale of many e-cigarette products in the U.S., a senior official told Bloomberg News last week.

"While many menthol smokers would likely move over to non-menthol products, it would still be a major blow". The proposal would also be delayed if large tobacco companies fight the FDA's authority to do restrict it. They have had only two annual declines in the past 19 years.

A study published last week in the academic journal Tobacco Control found that 6 percent of 15- to 17-year-olds used the popular e-cigarette brand JUUL within the last 30 days, and 11 percent had used an e-cigarette in general. The Winston maker gets about 15% of earnings from menthol brands such as Kool and Salem in the U.S., according to Jefferies.



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