Stay-at-Home Smoking Helps Tobacco Sales During Virus Lockdowns

Date: 2020-04-03 17:45:44

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Big Tobacco is one of the few industries whose sales are holding up during coronavirus lockdowns, with smokers lighting up while working from home. #Coronavirus #Covid19 #CoronavirusUK

Imperial Tobacco Plc, the maker of Kool cigarettes, said Tuesday the outbreak hasn’t hurt business and sales remain in line with expectations. British American Tobacco Plc, whose brands include Lucky Strike and Kent, said something similar two weeks ago, when it reiterated its 2020 guidance.

The resilience of an industry based on the addictiveness of nicotine contrasts with other sectors, such as alcoholic drinks and confectionery. Companies from the world’s largest brewer, Anheuser-Busch InBev NV, to chocolate maker Lindt & Spruengli AG have had to withdraw their outlooks as stores and bars stay shuttered and consumers hunker down eating convenience meals at home.

There are some signs consumers may be hoarding cigarettes just as many build up stockpiles of canned food, according to Piper Sandler analyst Michael Lavery. At U.S. retailers, cigarette volumes averaged weekly declines of 6.8% in January and February, but then they bounced back to 1.1% growth in the week through March 22.

Smokers may be consuming more as they spend more time at home and away from places that ban smoking such as restaurants, offices and bars, Lavery wrote.

Imperial shares climbed as much as 12% in London. BAT, which has forecast high single-digit earnings per share growth this year, rose as much as 2.9%.

Cigarette consumption is likely to remain robust as quarantined consumers face boredom, stress and anxiety, and as tobacconists stay open alongside essential shops like grocery stores and pharmacies in countries such as France. This is despite the fact that the World Health Organization has said smokers may have an increased risk of more severe reactions to Covid-19.

“If smokers are willing to take their chances with cancer and the various other serious health risks with cigarettes, we think they are likely to be little fazed by Covid,” Owen Bennett, an analyst at Jefferies, wrote in a note last week.

One area that could see a negative impact is vaping, as consumers may avoid starting the habit due to health concerns, Bennett said. A downturn in vaping is one reason Imperial Brands cited in February when it forecast a slight drop in earnings this year.

Michael R. Bloomberg, founder and majority owner of Bloomberg News parent Bloomberg LP, has campaigned and given money in support of a nationwide ban on flavored e-cigarettes and tobacco.

Read more: https://www.bloomberg.com/news/articles/2020-03-31/big-tobacco-rides-out-virus-storm-amid-work-at-home-smoking?sref=MyGN3MNu

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