London
Cigarette brands go up in smoke:British American Tobacco (BAT) has written down the value of some of its US cigarette brands by £25bn, say Oliver Barnes and Maxine Kelly in the Financial Times. The group, which bought Reynolds American – the second-biggest US cigarette maker by sales – for £40bn in 2017, blamed changing consumer habits for declining sales. Many squeezed smokers are switching to cheaper brands, quitting, or being drawn to illicitly sold disposable vapes, it said. The value of affected brands, including Camel and Pall Mall, has been cut by a third, from £67bn last year.
BAT calls its primary source of cash “combustibles”, not cigarettes, and it’s not hard to see why, says Lex in the same paper. Just like in the oil industry, tobacco companies facing a strategic choice can either “extract as much value as possible from legacy assets and liquidate their stock, or they can seek to build new sustainable businesses”. Unfortunately for BAT, it has “fallen between these two stools”. BAT is “doubling down”
