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

2Firsts|Sesh Advances Nicotine Pouch PMTA to Filing Stage, Experts Highlight Regulatory Threshold and Market Window
2Firsts|Sesh Advances Nicotine Pouch PMTA to Filing Stage, Experts Highlight Regulatory Threshold and Market Window
Sesh said its Premarket Tobacco Product Application (PMTA) for 64 nicotine pouch SKUs has been accepted by the U.S. Food and Drug Administration (FDA) and advanced to the Filing stage, entering substantive scientific review. Industry experts say the development signals that the application has crossed a key technical and regulatory threshold, while also highlighting growing divergence in regulatory capability and market positioning within the nicotine pouch category.
Special Report
Mar.24 by 2FIRSTS.ai
Japan Says Heated Tobacco and E-Cigarette Use Is a Key Factor Behind Rising In-Flight Smoking
Japan Says Heated Tobacco and E-Cigarette Use Is a Key Factor Behind Rising In-Flight Smoking
Japan’s transport ministry said on April 14 that major Japanese airlines reported 429 passenger smoking incidents on domestic and international flights in 2025, the highest level since comparable data collection began in 2004. The government said the spread of heated tobacco products and e-cigarettes was an important factor behind the increase. Japan plans to work with airlines to raise public awareness of fire risks on aircraft.
Apr.14 by 2FIRSTS.ai
Fontem Drops Texas Lawsuit and Plans to Refile in D.C. Over FDA Handling of Zone Application
Fontem Drops Texas Lawsuit and Plans to Refile in D.C. Over FDA Handling of Zone Application
Fontem US, the maker and seller of Zone nicotine pouches, has voluntarily dismissed its lawsuit against the U.S. Food and Drug Administration, which it had accused of unfairly delaying its market application.
Mar.25 by 2FIRSTS.ai
Poland Seizes 223,688 Disposable Vapes Without Required Excise Marks
Poland Seizes 223,688 Disposable Vapes Without Required Excise Marks
Poland’s Customs and Tax Service in Łódź carried out an inspection at a property near Zgierz and seized 223,688 disposable e-cigarettes without the required excise markings.
Apr.07 by 2FIRSTS.ai
Delaware Tax Proposal Targets Vapes, Nicotine Pouches and Other Tobacco Products
Delaware Tax Proposal Targets Vapes, Nicotine Pouches and Other Tobacco Products
Delaware’s latest tobacco tax increase bill cleared its first House committee hurdle on April 22. Backed by House Speaker Melissa Minor-Brown, the bill would raise the cigarette tax from $2.10 to $3.60 per pack and increase taxes on moist snuff, vapor products and other tobacco products.
Apr.24 by 2FIRSTS.ai
IMF Article Sets Out Three Principles: Cover All Harmful Products, Match Tax Rates to Harm, Improve Cross-Border Coordination
IMF Article Sets Out Three Principles: Cover All Harmful Products, Match Tax Rates to Harm, Improve Cross-Border Coordination
A March 2026 article in Finance & Development, “Taxing Harmful Habits,” argues that taxes on harmful products such as tobacco, alcohol and sugary drinks should better reflect the health harm they cause. The authors propose three principles: capture all harmful products, align tax rates with health harm, and strengthen cross-border coordination to reduce evasion and smuggling.
Mar.24 by 2FIRSTS.ai