BAT launches e-cigarette, eyes larger market

British American Tobacco (BAT), the world's top cigarette maker, said it is planning to boost sales of electronic cigarette market around the world.

BAT, whose premium brands include Kent, Dunhill, Lucky Strike and Pall Mall, launched online sales of its e-cigarette (Vype) on Monday, becoming the first major tobacco firm to offer e-cigarettes in Britain.

E-cigarettes - battery-powered metal tubes that turn nicotine-laced liquid into vapors - are gaining popularity among smokers.

Vype also uses a nicotine e-liquid that is made in the UK and contains only pharmaceutical grade nicotine.

The development of inhaled nicotine products, which includes e-cigarettes, is a natural extension of BAT's approach to tobacco harm reduction, which has been evolving over a number of years.

In December 2012, BAT spent about £40 million on acquisition of UK-based CN Creative Ltd that made e-cigarettes. In 2010 it set up Nicoventures, the company developing the new device. (See: BAT to introduce alternate nicotine product in UK next year)

The e-cigarette is currently available in a disposable format, with plans to supplement the product range with a rechargeable version in the near future.

Major tobacco manufacturers such as Lorillard, Imperial Tobacco, Reynolds American and Altria are now placing bets on e-smokers.

Some analysts say that the e-cigarette may outsell conventional cigarettes in a decade.

BAT's half-year basic earnings per share were up 9 per cent at 106.6 pence; it declared an interim dividend of 45.0 pence, up 7 per cent on last year, which will be paid on 30 September 2013.

BAT said it was confident of another year of good earnings growth as price rises help offset falling consumption. Its first-half sales increased 4 per cent to £7.75 billion, while the operating profit was 3 per cent higher at £2.81 billion.

''Despite fragile economic conditions persisting in some parts of the world, notably Europe, BAT has delivered another good set of results', Richard Burrows, chairman, said.

However, sales volumes in the first six months of the year were down 3.4 per cent at 332 billion cigarettes as a strong performance in Asia Pacific and higher sales of its premium brands were outweighed by a fragile European market and tough one-off trade comparatives in Brazil and the Middle East.

BAT today also announced the retirement of John Daly, who will step down as chief operating officer at the end of December 2013. He will retire from the board of BAT in April 2014.

Daly was appointed to the management board in 2004, joining the main board as chief operating officer in 2010. During his 19-year career with BAT, he has held various senior management positions.