- Vaping supplier shares down over 6%
- UK ban on disposable vapes announced
- Vape sales have grown in recent years
Shares in vaping supplier Supreme (SUP) were down over 6% to 98.50p and Chill Brands (CHLL) fell more than 20% to 3p in morning trading as the UK government announced its intention to ban disposable vapes.
Last year prime minister Rishi Sunak said at the Conservative Party conference that he would crack down on the legal age of smoking and children vaping.
BRITISH AMERICAN TOBACCO HOLDS FIRM
Shares in the tobacco firm British American Tobacco (BATS) however were unaffected by the UK government’s announcement – in fact, the shares were up by over 1% in morning trading to £23.72.
The FTSE 100 listed company said last November that it is fully supportive of new regulations being introduced ‘so the vaping industry can fulfil its potential to make smoke-free a reality in the UK.’
Asli Ertonguc, British American Tobacco lead for the UK said: ‘We believe that underage users should never vape, so we want confectionery, dessert and soft drink flavours to be banned and the introduction of a new regime for how and where vapes are sold.’
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Russ Mould, investment director at AJ Bell said: ‘Sales of vapes have grown in recent years, with numerous manufacturers and suppliers capitalising on the trend by offering more products in as many flavours and styles as you can imagine. Naturally, companies caught up in the government’s clampdown face a sharp hit to earnings if there continue to be new measures to stamp out unhealthy habits involving vaping among consumers.
‘Chill Brands implies it is not affected by the latest announcement because recharging ports on its products mean they are not classified as disposable. The market seems to question this logic given the fierce share price sell-off.
‘Effectively, investors are saying there is a major risk to earnings, whether it is from Sunak’s latest announcement or the general direction of travel by the government to stop young people getting into the vaping habit.’
BAN WELCOME
The potential ban on disposable vapes was welcomed by charity waste and resources action programme (WRAP).
‘WRAP welcomes the move to ban disposable vapes in the UK. Single use vapes consume vast amounts of natural resources and contribute to plastic and electrical waste and littering.
‘They present a fire hazard at waste facilities and use an estimated 5,000 electric vehicle batteries worth of lithium per year.
‘An estimated five million disposable vapes are discarded each week - equivalent to eight every second. With reusable vapes easily available to help people wishing to quit smoking, and disposable vapes linked with use by children, WRAP supports this call for a ban,’ said Claire Shrewsbury director of insights and innovation.
LEARN MORE ABOUT BRITISH AMERICAN TOBACCO
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
