* Company trying to catch up with rival Philip Morris
* 2016 adjusted profit from operations up 10 pct
(Adds details from media briefing)
By Esha Vaish and Emma Thomasson
Feb 23 (Reuters) - British American Tobacco wants
to double the number of countries where it sells vaping products
this year and again in 2018, it said on Thursday, as it chases
rivals Philip Morris International to grab a share of a
BAT and Philip Morris were the first of the big tobacco
firms to invest in cigarette alternatives a few year back, as
growing health consciousness reduces traditional smoking.
Earlier this year, BAT agreed to buy U.S. peer Reynolds
American for $49.4 billion, a deal that will help boost
its position in the small but growing market for e-cigarettes
and other cigarette alternatives.
However, analysts say BAT is scrambling to catch up with
Philip Morris in the heated products 'vaping' market, where the
U.S. firm has established a stronghold with its IQOS device, the
result of a decade of research and $3 billion of investment.
IQOS, which electronically heats tobacco enough to produce a
vapour without burning it, is currently in 20 markets, including
most notably Japan, and will be in as many as 30 by the end of
this year, Philip Morris said on Wednesday.
BAT said on Thursday it now had the biggest vapour business
in the world outside of the United States and was present in 10
markets, with almost 40 percent of the market in Britain and
around 50 percent in Poland.
The company, which in January quit plans to market a
nicotine inhaler called Voke, plans to double the number of
markets where it offers cigarette alternatives this year, and
again next year.
"It is really only the beginning," Kingsley Wheaton, head of
next generation products at BAT, told journalists, adding BAT
had invested over $1 billion in cigarette alternatives. "We are
committed to delivering more innovation and less harm."
BAT said initial results were very encouraging for a new
tobacco heating device called Glo it launched in Sendai, Japan
in December, which takes aim at IQOS. BAT plans to roll-out and
upgrade the product in 2017 and beyond.
Some analysts said a lack of detail left them unimpressed,
especially after Philip Morris broke out the 2016 net revenue
contribution from so-called reduced risk products, which include
IQOS, as $739 million, less than 1 percent of its total revenue.
"In the heated product, it would be very fair to say Philip
Morris is significantly ahead," Shane MacGuill, Head of Tobacco
Research at Euromonitor International, told Reuters.
BAT, the maker of Dunhill and Lucky Strike cigarettes, said
cigarette volume grew 0.2 percent to 665 billion in 2016, adding
that although it fell 0.8 percent on an underlying basis, it
outperformed the industry which saw a roughly 3 percent decline.
Adjusted profit from operations rose 9.8 percent to 5.48
billion pounds ($6.83 billion). Revenue climbed 12.6 percent to
14.75 billion pounds, helped by a weaker British pound.
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