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Cigarette maker cuts value of Camel and other US brands by $31b

Shares of British American Tobacco tumbled Wednesday after it acknowledged that its US brands Camel, Natural American Spirit, Newport, and Pall Mall may no longer be economically viable in 30 years.Richard Drew/Associated Press

British American Tobacco, the cigarette giant whose portfolio includes Camel and Lucky Strike, said Wednesday that it would write down the value of its brands by $31.5 billion, because of the slowing economy and a shift toward vaping among smokers.

The company told investors that it had reassessed the “useful economic lives over an estimated period of 30 years” for some brands, mainly in the United States. A company spokesperson said the brands affected were Camel, Natural American Spirit, Newport, and Pall Mall.

In essence, the announcement reflects an overpayment for Reynolds American, which the group acquired in 2017 in a $49 billion deal, creating the world’s largest publicly traded tobacco business. The write-down, described as “noncash adjusting impairment charge,” is primarily an accounting matter with no effect on its day-to-day operations, but investors reacted negatively to the message about its long-term prospects: British American Tobacco’s shares in London sank 8.4 percent, falling to their lowest level in more than 10 years.

British American Tobacco’s sales in the United States have slipped, as high inflation and other economic pressures have pushed smokers to trade down to cheaper brands and what the company describes as “illicit” vapes.


Tadeu Marroco, British American Tobacco’s CEO, said that by 2035, half of the company’s sales would come from vapes, e-cigarettes, and other “noncombustibles” from its stable of brands like Vuse and Glo. About 10 percent of the world’s 1 billion smokers use these products, offering “vast” scope for growth, he added.

The US Food and Drug Administration is moving toward a ban on menthol cigarettes and has proposed a cut in nicotine levels in cigarettes to make them less addictive. That has led tobacco companies to shift away from cigarettes and toward other nicotine products, reflected in marketing slogans like British American Tobacco’s “Build a Smokeless World” and Philip Morris International’s “Unsmoke Your World.”


On a call with investors, Marroco said the write-down reflected the shift “from indefinite life to a finite life” for the economic value of its US brands, which it will begin to amortize over the next 30 years. “In that period of time, for sure, there is no way to justify the presence of the brands,” he said.

There are more than 28 million adult smokers in the United States, according to the Centers for Disease Control and Prevention, and smoking-related diseases account for 1 in 5 deaths per year. About 10 percent of high school students reported using e-cigarettes, according to a recent CDC survey, versus less than 2 percent who said they smoked cigarettes, a record low. About 40 percent of people who use e-cigarettes are younger than 25, and a majority of them never smoked before vaping, the CDC said.

British American Tobacco said that it expected revenue this year to grow by a low single-digit percentage, which would outpace sales in the global tobacco industry, which it estimated will shrink by 3 percent. But the $30 billion-plus write-down is what grabbed the most attention.

“It’s noncash and ‘exceptional,’” analysts at RBC Capital Markets wrote, “but goodness, that’s a big number exemplifying the perils of this industry and sending some less than confident signals about the outlook for cigarettes.”

This article originally appeared in The New York Times.