Increased regulations around vaping products in the US are likely to benefit large tobacco companies such as British American Tobacco and Philip Morris, as they are 'more familiar' with the regulatory process than smaller firms, according to Moody's Investors Service.
In addition, larger firms would also have the resources in place to meet the 'increasingly stringent regulatory requirements' of the US Food and Drug Administration (FDA) and other agencies, it said.
Health Concerns
There have been calls for increased regulation around the vaping sector due to a rise in lung-related illnesses in the US, which have led some cities, such as San Francisco, to announce an outright ban on the sale and distribution of vaping devices.
Last Friday, British American Tobacco's subsidiary Reynolds American announced the submission of a Premarket Tobacco Product Application (PMTA) to the FDA seeking permission to promote and market its VUSE vapour product.
The submission was the first by any firm operating in the vaping industry, and was supported by more than 150,000 pages of documentation, including details on the composition and design of VUSE products, as well as chemistry, toxicological and behavioural studies.
“We have long worked to build a broad portfolio of competitive options for the adult tobacco consumer, and today’s application is a strong next step for us in that journey," commented Ricardo Oberlander, CEO of Reynolds. "We continue to support the FDA’s efforts to create, implement and enforce a science and rule-based regulatory regime to protect the public health."
Credit Positive
Commenting on BAT's submission, Moody's said that the move is credit positive, as it 'comes well ahead of key competitors and represents a further, albeit small, step for BAT as it positions itself as a key player in the nascent potentially reduced-risk products industry'.
Moody's also said that the decision to issue a submission to the FDA marks an 'important step' for the vaping industry, as it seeks to restore its reputation amid headlines relating to health concerns and even deaths.
BAT generated £189 million in net revenues from vaping products in the first half of the year, equating to about 2.1% of the group's total net revenues of £8.8 billion from its strategic portfolio.
Including heated tobacco and oral tobacco products, BAT generated £850 million from non-combustible products, or 8.6% of group net revenues.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
