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BAT shores up US heated tobacco prospects as competition grows

Published 08/02/2024, 08:18
Updated 08/02/2024, 14:54
© Reuters.

LONDON (Reuters) - British American Tobacco (LON:BATS) has submitted an application to market its Glo Hyper device as a reduced-risk product in the United States, its first movement in years on heated tobacco in the world's biggest market for smoking alternatives.

The maker of Dunhill and Lucky Strike cigarettes had previously applied to market Glo in the U.S. in 2021 but has yet to receive approval.

Chief Executive Tadeu Marroco subsequently said that heated tobacco did not have huge potential there and BAT would instead focus on vaping.

He said on Thursday that while that perspective had not changed, BAT had submitted a modified risk tobacco product application for Glo Hyper to the U.S. Food and Drug Administration in December.

It was clear that BAT's competitors would launch heated tobacco products in the market, he told Reuters by phone.

"We also want to be prepared in case the category surprises us," he added.

If granted, the application would allow BAT to make certain health claims about Glo in its U.S. marketing, such as that it is lower risk or reduces exposure to harmful chemicals compared with smoking.

The company is under pressure to better compete in heated tobacco, where rival Philip Morris (NYSE:PM) International (PMI) has taken some 70% of the market and plans to launch its IQOS device in the U.S. this year.

Altria (NYSE:MO) and Japan Tobacco International have also announced a partnership to launch a heated tobacco device in the United States.

Heated tobacco devices warm up packages of ground up tobacco but do not burn them in an attempt to avoid the harmful chemicals produced via combustion.

© Reuters. FILE PHOTO: A woman poses with a cigarette in front of BAT (British American Tobacco) logo in this illustration taken July 26, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

BAT's shares rose almost 8% on Thursday, when it announced it could sell-down some of its stake in India's ITC and reported full-year results.

(This story has been officially corrected to say 'Glo Hyper,' not 'Glo Hyper Pro,' in paragraphs 1 and 4)

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