BAT Takes $31.5 Billion US Cigarette Impairment, Sets New Goal: 50% of Revenue From Non-Combustible

British American Tobacco (BAT) has taken a $31.5 billion impairment in the U.S. market, saying there is no long-term future for traditional cigarettes.

According to a Reuters report, British American Tobacco (BAT) recorded a $31.5 billion loss by writing down the value of its brands in the United States. The company said that the traditional cigarette market has no long-term future.

Reuters said in a separate report that this impairment marks the first time one of the world’s major tobacco companies has cut the value of traditional cigarettes in a key market, while underscoring the industry’s need to focus on alternatives. This massive write-down stems from regulations surrounding cigarettes and growing awareness of health risks affecting the market, including the planned menthol cigarette ban.

Facing various challenges in the U.S., from inflation-strained consumers switching to cheaper brands to the rise of illegal disposable vaping products, the company decided to take this step. Reuters reported that BAT said these factors, combined with the broader shift away from smoking, mean that “it will change the way U.S. brands are treated on the balance sheet, converting their value to a finite 30-year lifespan.”

The brands affected by this valuation include Newport, Camel, Pall Mall, and Natural American Spirit, a spokesperson added.

BAT Chief Executive Tadeu Marroco described the move as “accounting catching up with reality.” He added that while he does not believe cigarettes will disappear within 30 years, carrying this cost is no longer justified.

According to Reuters, “BAT said full-year revenue growth is likely to be at the lower end of its 3-5% range. It also expects low-single-digit growth in revenue and adjusted operating profit in 2024.”

The company also said it plans to begin amortizing the remaining value of its U.S. combustible brands starting in 2024, and announced a new target for non-combustible products to account for 50% of total revenue by 2035.