Vaping crackdown wipes £1.9bn off cigarette maker Imperial Brands

American regulators have brought in strict new controls on vaping after an explosion in the number of young people using the addictive products

Tobacco company Imperial Brands saw its shares plunge on Wednesday after warning that a crackdown on vaping in the US would hurt profits.

The announcement wiped almost £1.9bn off Imperial’s market capitalisation as shares fell 10 per cent before partially recovering to trade 8 per cent down.

Imperial, which makes cigarette brands including Lambert & Butler and Richmond, said earnings per share would drop 10 per cent this year.

The company blamed a Federal Drug Administration ban on certain flavours of cartridge-based vapes, and weaker than expected consumer demand for e-cigarette products.

American regulators have brought in strict new controls on vaping after an explosion in the number of young people using the addictive products.

A ban on most flavoured cartridges comes in on Thursday as part of measures to reduce vaping’s appeal to teenagers.

While public health bodies maintain that e-cigarettes are significantly safer than smoking, there has been public outcry at companies’ marketing efforts, which have included brightly coloured cartridges, an array of flavours and adverts on social media.

Imperial and other tobacco companies have pinned their hopes on the growing use of e-cigarettes as smoking rates decline in wealthy countries.

“Regulatory uncertainty and adverse news flow continues to affect demand in the US and Europe,” Imperial said in a stock market update on Wednesday.

The company’s profit warning comes during a turbulent period that has seen the departure of chief executive Alison Cooper this week.

Beyond the vaping market, Imperial hailed a good start to the year for its tobacco business, partly thanks to sales growth in Africa and Asia.

In December, Imperial’s rival British American Tobacco (BAT) was among four e-cigarette sellers banned from promoting their products on public Instagram pages after adverts appeared alongside pictures of well-known celebrities.

BAT claimed its posts that included pictures of Lily Allen, Bohemian Rhapsody star Rami Malek and other famous faces only “provided information” to users and were not adverts.

The advertising watchdog disagreed, stating in a ruling that the posts “clearly went beyond” providing facts and were intended to promote vaping products.

Adverts for BAT, Ama Vape Lab, Attitude Vapes and Mylo Vapes were all banned in a decision hailed as a “major step forward” in stopping companies marketing addictive products online.