BAT Writes Down Value of Its U.S. Cigarette Brands

Earlier this month, British American Tobacco (BAT) announced a $31.5 billion impairment to the value of some of its U.S. cigarette brands. The affected brands include Newport, Camel, Pall Mall, and Natural American Spirit. Their value on BAT’s balance sheet will be adjusted to a finite 30-year useful life, resulting in a non-cash impairment charge. This marks the first time a major global tobacco company has partially written down the value of its traditional cigarette business in a key market such as the United States.

BAT’s impairment highlights the challenges facing the traditional tobacco business as industry dynamics evolve. BAT attributed the move to economic pressures in the U.S., where inflation-weary consumers are switching to cheaper brands, as well as the rise of illegal disposable e-cigarettes. In addition, an increasingly strict regulatory environment and growing awareness of health risks have led to declining cigarette sales in some markets. BAT added that these sales are expected to keep falling, with global tobacco industry volumes projected to decline by about 3% in 2023.