British American Tobacco Plc (LON:BATS) will attempt to counter the falling numbers of smokers in the UK with a hybrid product that is considered safer than traditional cigarettes. According to a recent report in The Sunday Times, the British tobacco giant will start testing its first “heat, not burn” product, called iFuse, in an undisclosed European market by the end of the month. If successful, iFuse would launch in Britain shortly after the initial tests, the newspaper said, citing unnamed sources.
In a separate report on the development, The Financial Times said that the company would launch the product this week and quoted BAT’s director of new technology, Kingsley Wheaton, who revealed more details about the device. Wheaton said that iFuse devices would vapourise nicotine-infused liquid like an e-cigarette but then allow the heated vapour to pass through a capsule holding tobacco, where it will pick up flavour.
While iFuse will likely be regulated as a tobacco product - with graphic health warnings and strict advertising rules – Wheaton said that the tax costwould probably be lower as the amount of tobacco was smaller. He also said that the device would be “cleaner” than other cigarettes that warm tobacco instead of burning it, though he added that health research was still in early stages.
“On the basic toxicologic studies we’ve done, the aerosols that come out of this are similar to the aerosols that come out of vaping product,” Wheaton said, as quoted by the FT.
In today’s trading, BAT shares were down 0.4 percent lower at 3,858.50p, as of 15:16 GMT. The stock has risen 10.2 percent since the start of the year and the company’s market capitalisation currently stands at £71.9 billion.
The 19 analysts offering 12 month price targets for BAT have a median target of 4,000p, with a high estimate of 4,350p and a low estimate of 3,020p. As of November 21, 2015, the consensus forecast amongst 24 polled investment analysts covering BAT had it that the company will outperform the market. The same consensus estimate has been maintained since April 30, 2015, when the sentiment of investment analysts improved from “hold”.