BAT says US crackdown on illegal vapes critical to sales growth

British American Tobacco Plc is seeing early benefits from a US crackdown on illicit vaping products, though it stopped short of upgrading its guidance due to uncertainty around the timeline of enforcement efforts.

The maker of Dunhill cigarettes said Tuesday it sees revenue from its Vuse vapour products dropping by the high-single digits this year, which it blamed on competition from illegal products in the US and Canada. Smokeless products, which also include nicotine pouches, make up about 18% of BAT’s revenue.

Read: BAT lights up again as rerating gathers pace

“What we expect in the next year is that vape in the US will not be a drag anymore in our new category numbers,” Chief Executive Officer Tadeu Marroco told analysts, adding it’s still too early to say how it will affect sales figures.

Shares of BAT fell as much as 5.4%, the most intraday since April, after the company said it expects revenue growth next year at the lower end of its mid-term guidance range. The stock was up 50% this year through Monday’s close.

That means 2026 “will be the fourth consecutive year for quite modest growth guidance,” Panmure Liberum analyst Rae Maile said in a note, adding that rival Imperial Brands Plc’s shares are more attractive in terms of value and growth.

Still, BAT expanded its buyback program to £1.3 billion ($1.7 billion), up from the £1.1 billion set out in July. The company expects full-year revenue growth of 2% at constant currency rates this year, the top end of its forecast range.

“BAT is, in our view, at an early stage of a successful transition towards a Smoke Free Products-centric portfolio,” Jefferies analysts including Andrei Andon-Ionita said in a note, citing signs of momentum in the US.

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