British American Tobacco bullish on prospects as it invests in new products

 
Alys Key
Follow Alys
BRITAIN-US-TOBACCO-TAKEOVER-BAT-REYNOLDS
BAT is investing in expanding glo in Europe (Source: Getty)

British American Tobacco (BAT) lit up sentiment this morning, saying it expects to make £1bn from smoking alternatives this year.

Shares in the group were up almost 0.5 per cent in early trading after it said trading was in line with expectations, with volumes on track to be above the market.

Sentiment in the tobacco industry is low as global sales decline. BAT expects global industry volume to be down 3.5 per cent this year.

But like its peers, BAT sees a bright spot in next generation products (NGPs): e-cigarettes and tobacco heating products.

BAT's tobacco heating product glo now has a 4.3 per cent share of the market in Japan, its launch market.

Read more: BNP Paribas' funds arm has ditched tobacco investments

Growth in the country is now slowing, but BAT is eyeing other opportunities to bring the product to new markets.

Yesterday the tobacco giant announced an investment of €800m (£705m) over the next five years in a new factory in Romania.

The factory will be dedicated to producing tobacco sticks for glo, eventually becoming the sole supplier for the European market.

By the end of 2018, the group is aiming to more than double revenue from NGPs to over £1bn.

Read more: The case for tobacco packaging restrictions goes up in smoke

Related articles