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British American Tobacco opens Milan outlet and launches vaping device

Published 01/12/2016

British American Tobacco acknowledged the market for traditional cigarettes is declining
British American Tobacco acknowledged the market for traditional cigarettes is declining

British American Tobacco (BAT) is ramping up its expansion into electronic cigarettes with the launch of a flagship retail outlet in Milan and a new vaping device.

The company has set up shop in the upmarket Navigli district of the Italian city and hopes that its new "Vype Pebble" contraption will help provide an additional revenue stream as traditional cigarette consumption continues to fall.

Kingsley Wheaton, managing director of next generation products at BAT, told the Press Association: "The traditional cigarette market has been in long term decline globally for a while, with the market falling about 1% a year.

"We've been able to price through the decline but the vapour model represents a new revenue and profit pool."

Mr Wheaton said that the firm is in "investment mode" and the move comes after the group launched a 47 billion US dollar (£38.3 billion) takeover of US tobacco firm Reynolds, in which it holds a 42.2% stake, in October

Vype is one of the firm's best known e-cigarette brands, and BAT is describing the Pebble's launch as a "game-changer for the world of vaping".

"We make 15 billion US dollars (£12 billion) of sales in tobacco, and Vype is small in comparison, but we're building a brand and not only investing in long term shareholder returns, but societal returns.

"There are clear health risks from combustible cigarettes so we want to provide a range of products that consumers can choose from. We believe this product provides reduced harm and risk, and that journey has been going for a long time and we believe it's the right thing to do," Mr Wheaton added.

The group has invested 1 billion US dollars in next generation products - tobacco heating, electronic and hybrid models - over the past five years and expects to inject a similar amount in the next five.

On Wednesday rival tobacco giant Philip Morris announced that it is launching a less harmful cigarette, which the firm believes could help pave the way to phasing out conventional cigarettes.

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