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### The Changing Landscape of the Tobacco Industry

#### By Natalie Sherman
#### Business reporter, New York
#### 6 December 2023, 22:04 GMT
#### Updated 2 minutes ago

BAT’s Adjustments Amidst Changing Consumer Preferences

The maker of Lucky Strike and Pall Mall cigarettes, British American Tobacco (BAT), is facing significant challenges as its smoking business in the US is dwindling. In response to the changing consumer landscape, BAT wrote off ┬ú25bn ($31.5bn) in value due to the altered outlook for brands such as Newport and Camel. This move resulted in a more than 30% reduction in the brands’ worth and a steep decline of over 8% in the company’s share price.

AI legalese decoder‘s Role

The AI legalese decoder can help with this situation by providing insights into the legal and regulatory implications surrounding the decline of BAT’s cigarette business in the US. As consumer preferences continue to shift towards alternatives such as vapes and non-combustible products, the AI legalese decoder can assist in navigating the complex legal landscape of tobacco regulations and the evolving market dynamics.

Strategic Shift and Future Outlook

BAT’s cigarette sales have been grappling with the decline in US smoking rates and the increasing popularity of alternative products. Additionally, the demand for its brands has waned as consumers, faced with higher prices, opt for other purchases or more affordable options. In an effort to reignite growth, BAT is focusing on vaping products, aiming to generate 50% of its revenue from “non-combustible” products by 2035. Moreover, the company re-evaluated the economic lifespan of its US cigarette brands, now estimating a useful life of 30 years rather than an indefinite one.

Acknowledgment of Industry Shift

This write-down by BAT marks the industry’s first acknowledgment of the monumental changes affecting the tobacco sector. Chief executive Tadeu Marroco noted that the adjustment reflects the Accounting’s catch-up with the reality of the evolving consumer landscape. He emphasized the increased interest of US smokers in new categories, indicative of broader changes in the industry beyond the US market.

Implications for Tobacco Rivals

Following BAT’s announcement, shares in US-listed tobacco competitors, such as Altria and Philip Morris, experienced declines, underscoring the ripple effects of BAT’s strategic adjustments on the industry.

The Way Forward

Despite these challenges, BAT remains optimistic about its overall performance, forecasting a minimum 3% increase in organic revenue for the 2023 financial year. Additionally, the firm highlighted the continued strong performance of traditional cigarette sales outside of the US market, signaling potential growth opportunities in global markets.

In conclusion, BAT’s response to the evolving tobacco landscape underscores the critical need for strategic adaptation in a rapidly changing industry. As the market dynamics continue to evolve, the AI legalese decoder can offer invaluable legal guidance to navigate the complex regulatory environment and anticipate future challenges and opportunities.

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