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BAT and Imperial downgraded on basis of electronic cigarette growth

| July 10, 2013

Analysts at Canaccord Genuity have downgraded their recommendations on British American Tobacco and Imperial Tobacco because of the growth in sales of electronic cigarettes, according to a piece by Nick Fletcher in The Guardian, quoting Canaccord’s Eddy Hargreaves and Alicia Forry.

The analysts were quoted as saying that they believed electronic cigarettes would prove to be the most significant development in the history of the organized tobacco industry, stretching back some 200 years. Consumers worldwide would migrate from tobacco smoking to electronic cigarettes at an accelerating rate through 2020.

Hargreaves and Forry estimated that the electronic cigarette market would grow from $2 billion in 2012 to $3 billion in 2013 (tobacco is approximately $700 billion).

In the longer term, the total combined market would shrink at a more rapid rate than most investors envisaged as electronic cigarettes weaned smokers off tobacco but did not attract new users into the overall category.

The critical question seems to be whether, in the short- to medium-term, at least, the tobacco cigarette sector continues to attract the insouciant young as new users, and that they migrate to electronic cigarettes as they become more mature.

Fletcher’s piece is at http://www.guardian.co.uk/business/marketforceslive/2013/jul/09/electronic-cigarettes-british-american-imperial.

Category: Breaking News

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