Cannabis part of the future says tobacco giant

image copyrightGetty Images

The UK's largest tobacco firm says it sees cannabis as part of its future as it tries to move away from selling traditional cigarettes.

British American Tobacco said it wanted to "accelerate" its transformation by reducing the health impact of its products.

In March, BAT took a stake in Canadian medical cannabis maker Organigram.

It also signed a deal to research a new range of adult cannabis products, initially focused on cannabidiol (CBD).

"As we think about our portfolio for the future, certainly beyond nicotine products are interesting for us as another wave of future growth," BAT boss Jack Bowles told Radio 4's Today Programme.

Mr Bowles said it saw cannabis related products as part of its future growth. The firm is currently trialling a CBD vape product in Manchester.

"I think [CBD vaping] is part of the future, but the present challenge is reduced harm in tobacco and nicotine alternatives, encouraging people to switch."

Releasing its half year results to the end of June, the tobacco giant reported an 8.1% rise in revenues to £12.18bn.

  • Marlboro maker could stop selling cigarettes in UK

It said more than a third of its UK revenues now come from vaping brands such as Vuse, Velo and glo.

The tobacco giant also saw its fastest gain in new customers, with users of non-combustible products – such as vapes – jumping 2.6 million to 16.1 million.

Tobacco sales recover

Despite its commitment to healthier choices, BAT said sales of its cigarettes recovered in some developing nations following the end of coronavirus lockdowns when sales were banned in some countries.

Sales of brands like Dunhill, Kent, Lucky Strike and Rothmans rose in the first half of the year in countries such as Brazil, Turkey and Pakistan.

AT said overall revenue from its combustibles division – cigarettes and heated tobacco products – fell 3% to £10.5bn.

William Ryder, an equity analyst at Hargreaves Lansdown, said that there is still some way to go if the tobacco giant is to meet its target of £5bn in revenues from nicotine alternatives by 2025.

"For now… BAT is still dependent on cigarettes… Traditional tobacco products still pay the dividend, and will do for some time," he said.

Leave a Reply

Your email address will not be published. Required fields are marked *