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Altria : Trump Plans to Ban Most Vaping Flavors

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09/11/2019 | 03:20pm EDT

By Jennifer Maloney and Alex Leary

President Trump said the U.S. plans to pull most vaping products from the market, citing growing concerns about health hazards and rising use by teenagers of the trendy alternative to traditional cigarettes.

The proposal would ban popular fruity flavors, as well as menthol and mint e-cigarettes from stores and online sellers, leaving just tobacco-flavored products. It is a major crackdown on a fast-growing market that reached $7 billion in sales last year and has attracted tobacco giants like Marlboro maker Altria Group Inc. and hundreds of smaller players.

Public-health officials have encouraged adult smokers to switch to less risky products such as e-cigarettes, which deliver nicotine in a cloud of vapor. Tobacco companies have invested in the technology to offset declining sales as smokers switched to new entrants like Juul Labs Inc. But the sleek devices also proved popular with teens and young people who had never smoked.

"We have a problem in our country. It's a new problem," Mr. Trump told reporters in the Oval Office as he met with top health officials. "It's called vaping, especially vaping as it pertains to innocent children."

The move comes as officials are investigating more than 450 potential cases of pulmonary illness related to vaping products, many of them containing marijuana. Six deaths in the U.S. have been associated with the illness. The latest death, reported Tuesday, was a Kansas resident over the age of 50, the state's health department said.

First lady Melania Trump, who was in the room with the president and the health officials, has urged more regulation of vaping products, and Mr. Trump cited her concerns about the welfare of their child, Baron.

Public-health officials say sweet and fruity flavors are appealing to young people and have contributed to a surge in teen vaping. Mint and mango flavored e-cigarettes account for more than 60% of sales for Juul, the U.S. market leader, according to people familiar with the matter. Other vaping companies advertise flavors such as Watermelon Twist and BlueRazz.

While the specific cause of recent lung illnesses is still unclear, doctors say some sort of chemical exposure related to vaping or e-cigarette use may be causing inflammation or injury in the lungs. Preliminary evidence indicates that the majority of the cases relate not to standard e-cigarettes, but to those using ingredients like THC, or tetrahydrocannabinol, the psychoactive ingredient in marijuana. Health authorities have warned people not to tamper with the devices or buy products off the street.

Outside the White House, Alex Azar, the secretary for Health and Human Services, said the administration's ban on mint and menthol flavored e-cigarettes was prompted by 2019 government survey data showing an alarming jump in teen use of e-cigarettes, including those flavors. The officials didn't release the 2019 data.

Mr. Azar said it would take the administration several weeks to put out the final guidance on the new policy. Then, after a 30-day period, all e-cigarettes, except for tobacco-flavored products, would have to be removed from the market.

Manufacturers of tobacco-flavored e-cigarettes may continue to sell their products but must apply by May 2020 for a Food and Drug Administration review. Makers of all other e-cigarette flavors can also apply for FDA authorization, but their products would be off the market pending the review.

"The tremendous progress we've made in reducing youth tobacco use in the U.S. is jeopardized by this onslaught of e-cigarette use," said Acting FDA Commissioner Ned Sharpless.

Last year's national survey found that 21% of U.S. high-school students and 5% of middle-school students were vaping. E-cigarette use increased nearly 78% among high-school students between 2017 and 2018 and 48% among middle-school students, according to the 2018 government survey.

"We agree that urgent action is needed and look forward to reviewing the guidance," an Altria spokesman said. "Reducing youth use of e-vapor products is a top priority for Altria."

A spokesman for Juul had no immediate comment. Altria, which previously sold flavored e-cigarettes, pulled its vaping products from the market last year before investing $12.8 billion in Juul.

The regulatory shift comes at a tricky time for Altria, which is in negotiations to merge with Philip Morris International Inc., which sells Marlboro outside the U.S.

The No. 2 U.S. cigarette maker, British American Tobacco PLC, whose Reynolds American division sells Vuse branded e-cigarettes, said it doesn't sell flavors that mimic children's food or appeal to youth. "We share President Trump's concern that some flavors, such as those resembling 'kid friendly' food products, may play a role in increasing youth appeal and that marketing activities should not be directed to youth," a spokeswoman said.

Thomas M. Burton contributed to this article.

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Sales 2019 19 795 M
EBIT 2019 10 439 M
Net income 2019 7 326 M
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Yield 2019 8,04%
P/E ratio 2019 10,5x
P/E ratio 2020 9,40x
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EV / Sales2020 5,15x
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