Dilemma of BAT: Slayed Camel is the Last Straw to Crush Investors

BAT by 2FIRSTS.ai
Dec.11.2023
Dilemma of BAT: Slayed Camel is the Last Straw to Crush Investors
English tobacco company faces difficult choices as traditional business struggles and new sustainable ventures emerge.

In industries such as tobacco that are facing long-term decline, companies are confronted with critical strategic choices. They can extract maximum value from traditional assets, divest their equity, or they can seek to build new sustainable businesses.

 

Attempting to do both of these things brings about execution risks. The British American Tobacco company is facing a dilemma.

 

Its traditional business - which accounts for more than 85% of its total sales and generates all of its profits - is facing difficulties. BAT prefers to describe it as its burning business rather than tobacco. On Wednesday (December 6th), it disclosed market data which showed that the $2.5 billion write-down of assets in its US division and lower growth expectations have "incinerated" nearly one-tenth of the company's value.

 

Especially in the United States, the surge in living costs and the emergence of disposable e-cigarettes have led to an 11% decline in cigarette sales in 2022. Tobacco companies like British American Tobacco have introduced luxury brands such as Camel to the consumer market, but they have not performed well.

 

The company's sales are expected to only meet the lower end of the 3-5% growth range this year. However, increasing prices has become challenging as sales have significantly declined. British American Tobacco currently projects below-average growth trends until 2026, which is also a factor reflected in its stock price.

 

In the rather murky world of accounting, this signifies that the conglomerate no longer considers its American brand to have perpetual value. By shortening its economic lifespan to 30 years, British American Tobacco has reduced the evaluation of its American brand from £67 billion to £25 billion, which was assessed when it acquired Reynolds American in 2017.

 

In a significant move, the BAT (Baidu, Alibaba, Tencent) invested $49.4 billion to acquire an additional 57.8% stake, thereby surpassing a total enterprise value of $100 billion, including debt. Although this write-down does not impact cash flow, it still represents half of British American Tobacco's current market capitalization.

 

E-cigarettes, heated tobacco products, and modern oral nicotine pouches are expected to break even this year, earlier than anticipated.

 

In reality, these smaller-scale businesses require a significant investment in marketing expenses, which has weakened their profit margins. The government's skepticism towards smokeless products also does not help improve the situation. Nevertheless, the British American Tobacco company still hopes for the popularity of smokeless products before the tobacco market phases out.

 

Given the poor shareholder return this year, even with a 10% yield, only a decrease in global interest rates can attract investors back to British American Tobacco.

 

We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

U.S. Health Groups Seek to Overturn FDA Enforcement Discretion for Pending PMTAs as Altria's Helix, NJOY and AVM Move to Intervene
U.S. Health Groups Seek to Overturn FDA Enforcement Discretion for Pending PMTAs as Altria's Helix, NJOY and AVM Move to Intervene
American Vapor Manufacturers (AVM) and Altria subsidiaries Helix Innovations and NJOY filed separate motions on October 7, 2026, seeking to intervene on the FDA's side in a lawsuit challenging its enforcement guidance for certain e-cigarette and nicotine pouch products with pending premarket tobacco product applications (PMTAs). Seven public health and tobacco-control organizations, including the Campaign for Tobacco-Free Kids, sued the agency in July to overturn the policy. AVM argues that vacating the guidance could disrupt orders, inventory, retail distribution and investments in regulatory submissions.
Regulations
Oct.09
Couche-Tard Posts Double-Digit U.S. Same-Store Growth in Other Nicotine Products, Led by Pouches
Couche-Tard Posts Double-Digit U.S. Same-Store Growth in Other Nicotine Products, Led by Pouches
Alimentation Couche-Tard said U.S. same-store sales in its “other nicotine products” category grew at a double-digit rate in the first quarter of fiscal 2027, led by nicotine pouches, while overall U.S. same-store merchandise revenues increased 1.7%. The company also said its Canadian nicotine business continued to face regulatory pressure and illicit-market headwinds. The U.S. performance coincides with Couche-Tard's participation in efforts to reopen Canadian convenience-store access to authorized nicotine pouches, though the company has not established a direct causal link between the two.
Sep.14
Reynolds Seeks to Join Altria Lawsuit Challenging FDA PMTA Rule and Calculation of 180-Day Deadline
Reynolds Seeks to Join Altria Lawsuit Challenging FDA PMTA Rule and Calculation of 180-Day Deadline
Three R.J. Reynolds companies are seeking to intervene in a lawsuit filed by Altria subsidiaries Helix Innovations and NJOY challenging the FDA's 2021 PMTA final rule. The companies dispute how the agency uses Acceptance and Filing reviews and completeness determinations to establish when the Tobacco Control Act's 180-day decision period begins. Reynolds has also linked prolonged PMTA reviews to competition from unauthorized vaping products. The FDA, meanwhile, has been accelerating reviews and reducing its backlog.
Sep.14
Exclusive Analysis | Smoore H1 Revenue Rises 19.9% Amid Growth Concentration, Profit Pressure and Slowing Momentum
Exclusive Analysis | Smoore H1 Revenue Rises 19.9% Amid Growth Concentration, Profit Pressure and Slowing Momentum
Smoore’s first-half 2026 revenue rose 19.9%, but the results revealed growing structural risks beneath the headline growth. Heat-not-burn contributed about 61% of incremental revenue and remains driven largely by one core customer, while traditional vaping markets diverged, own-brand growth slowed and China enterprise revenue declined further. Gross profit and adjusted profit lagged revenue growth, while second-quarter revenue growth slowed to about 1.9%, putting greater focus on the quality, concentration and sustainability of Smoore’s expansion.
Capital Markets
Aug.20
IQOS Enters Kantar BrandZ Global Top 100 for First Time, Valued at $36.6 Billion and Ranked No. 74
IQOS Enters Kantar BrandZ Global Top 100 for First Time, Valued at $36.6 Billion and Ranked No. 74
Philip Morris International’s IQOS has entered the Kantar BrandZ Top 100 Most Valuable Global Brands for the first time, ranking No. 74 with a brand value of $36.634 billion and becoming one of only three newcomers to the 2026 ranking. Kantar said the combined value of the Global Top 100 reached $13.1 trillion, up 22% year on year, while the threshold for entry rose to a record high. PMI says IQOS has more than 35 million users worldwide and surpassed $10 billion in annual net revenues within a decade of launch.
Sep.03
Special Report | From New York to Washington: How FDA’s Tobacco Center Is Reworking Product Review
Special Report | From New York to Washington: How FDA’s Tobacco Center Is Reworking Product Review
FDA’s Center for Tobacco Products is reshaping how it approaches tobacco product review. Based on 2Firsts’ on-site reporting in New York and Washington, this report traces CTP’s emerging direction: stronger links between PMTA and tobacco harm reduction, more category-specific review, greater emphasis on decision-relevant science, more predictable timelines and expanded use of sPMTA for product modifications. CTP also acknowledged major constraints, including just nine PMTA review teams, persistent backlogs and limits on hiring capacity.
Regulations
Oct.08