UK’s Largest Tobacco Company Says Cannabis Is ‘Part Of The Future’
The UK’s biggest tobacco firm, British American Tobacco, has said it sees cannabis as part of its future as it moves away from traditional cigarettes.
The legalisation of marijuana has been a controversial topic. While there have been studies about the health and economical benefits, the UK is yet to legalise its purchase.
Nonetheless, British American Tobacco (BAT) intends to invest in cannabis product development as it accelerates its transformation that reduces the health impact of its products.
BAT boss Jack Bowles told BBC Radio 4’s Today programme that ‘As we [BAT] think about our portfolio for the future, certainly beyond nicotine products are interesting for us as another wave of future growth.’
In terms of the avenues of this growth, Bowles claimed cannabis-related products would be part of its investment. Presently, the company is trialling a CBD vape product in Manchester. Bowles noted ‘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.’
Some will see this as a reflection of falling tobacco sales, but this isn’t the case. In fact, BAT sold 316 billion cigarettes in a six month period. This number sees an increase in the previous six months and has been connected to renewed demand as lockdown measures ease.
Despite sales of cigarettes growing, the company has larger concerns. Notably, BAT has seen its share price drop from £55 to £27 in the last four years, prompting the company to place ‘ESG (environmental, social and governance issues)’ at ‘the core of our strategy.’
ESG approval has become a key part of investment opportunities as PWC have noted its growing importance. By aligning itself with ESG policies, BAT will undoubtedly hope to boost its value.
At the moment, non-cigarette products have grown for BAT by half to £942m. However, this is a fraction of the company’s £12bn revenue.
The company intends to generate £5bn in revenues from nicotine alternatives by 2025. With that said, William Ryder, an equity analyst at Hargreaves Lansdown, believes the sales of nicotine products will keep the company making a profit for some time.
Ryder told the BBC, ‘For now… BAT is still dependent on cigarettes… Traditional tobacco products still pay the dividend, and will do for some time.’
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