UK tobacco shares celebrate following the new FDA guidelines regarding e-cigarettes

The U.S health regulator announced its exemption of tobacco and menthol from a list of banned e-cigarettes flavors on Friday. Following the announcement, Imperial Brands Plc and British American Tobacco (BAT) were seen gaining in the stock market. According to the FDA, under the new guidelines, e-cigarette manufacturers will be banned from using pod-based flavors which include dessert, fruit, and mint with the start of February. The new guidelines, as per the experts, are still lenient as compared to President Trump’s threat last September that he plans on putting a ban on all flavors of e-cigarettes including menthol in order to effectively counter the vaping epidemic that has been taking the teenage population in its grip.

BAT Gained 2.5% On Friday While Imperial Brands Followed Its Lead With A 1.4% Gain

Copy link to section Owing to the rising geopolitical complications in the Middle East, the majority of the FTSE 100 listed companies took a hit on Friday. Following FDA’s announcement, however, BAT printed the highest daily gain at 2.5% while Imperial Brands followed its lead with a 1.4% gain on Friday. In the previous year, afraid of a permanent ban, Imperial and BAT were forced to curtail their forecast for growth in the U.S. vapor market. Under the new guidelines, the tobacco manufacturers may be able to reintroduce a few of the flavors that were previously banned. The companies, however, will have to pass through a substantive FDA governed review in order to do so. Imperial Brands representative, Simon Evans, commented on FDA’s new guidelines and expressed his relief that the air has been cleared regarding the future of the banned products.

BAT Submitted Marketing Application For Vuse Solo e-Cigarettes To FDA In November

Copy link to section According to an American multinational investment bank, Jefferies, e-cigarettes’ sales may take a blow in the short term under the new guidelines, however, the financial impact for the market leaders like Imperial Brands and BAT would be minimal as its customers will be able to shift to tobacco, menthol, or any other traditional product of tobacco with greater margin. A marketing application for BAT’s Vuse Solo e-cigarettes was submitted to the U.S health regulator in November. Imperial Brands, on the other hand, is likely to submit a similar application for Blu e-cigarettes around May 2020. British American Tobacco ended the last year with a massive gain of around 40% in the stock market. Imperial Brands, on the contrary, had a turbulent year with a loss of around 20% in the stock market in 2019.