BAT: US vape import block may reduce illegal sales by a third

• An ITC judge ruled in BAT's favor in a patent dispute last year and recommended blocking disposable vapes that infringe its patents, with a full ITC determination expected in March followed by a 60-day presidential review
• BAT's CEO warned that long U.S. supply chains and large existing inventories would delay any market impact until early 2027, even if the import block is approved
• The CEO suggested the FDA may test a different regulatory approach to vapes, potentially including flavored products, after years of rejecting most new nicotine product applications

Summary

British American Tobacco (BAT) CEO Tadeu Marroco stated that a potential U.S. import block on unauthorized disposable vapes could reduce the illegal e-cigarette market by approximately one-third, though meaningful impact is unlikely before 2027.

Key Developments:

BAT estimates that unregulated vaping devices currently represent roughly 70% of U.S. e-cigarette sales, significantly impacting both its vape and traditional tobacco businesses. The company has filed two cases with the U.S. International Trade Commission (ITC) seeking to block imports of unauthorized devices.

In a favorable ruling last year, an ITC judge recommended a general exclusion order that would block disposable vapes infringing BAT's patents. BAT expects a full ITC determination in March 2025, followed by a mandatory 60-day presidential review.

Market Impact:

Marroco defined "meaningful impact" as reducing unregulated products from 70% to below 50% of industry sales. However, he cautioned that extensive U.S. supply chains and large existing inventories would delay tangible effects until early 2026 at the earliest.

Regulatory Context:

Tobacco giants including BAT and Altria have battled unauthorized vape products for years in the world's largest smoking alternatives market. Meanwhile, the FDA, after years of rejecting most new nicotine product applications, appears to be reconsidering its approach and may test alternative regulatory frameworks, potentially including flavored vapes.

Companies Mentioned: British American Tobacco (BAT), Altria

The outcome could reshape the competitive landscape in the U.S. vaping market, benefiting authorized manufacturers while curtailing illegal imports.