British American Tobacco's Response to FDA Announcement

LONDON, November 15, 2018 /PRNewswire/ --

In relation to the recent announcement from Commissioner Gottlieb, we share the FDA's concerns around youth access to vapour products and we welcome the priority that he has given to this matter. However, in relation to his proposals on menthol cigarettes, the science today does not support treating them differently from other cigarettes.

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Regarding youth access to vapour products:

• We have robust measures in place that demonstrate our commitment to marketing which does not target youth and have also communicated to the FDA that we will be applying additional measures.
• We fully support third party age verification of e-commerce and we already have this in place.
• We are also instituting an enhanced programme with all of our contracted retailers to drive compliance with underage sales laws.
• We would welcome similar measures being adopted industry-wide.

We also share the FDA's concern regarding balancing the importance of encouraging adult smokers to consider potentially reduced risk alternatives to cigarettes - like vapour products - whilst ensuring that youth do not use them.

Whilst research shows that flavours play an important role in an adult smoker's transition out of smoking, we understand the FDA's concern that some flavours can play a role in increasing youth appeal. That is why we are happy to work with our nearly 200,000 contracted retail stores to address youth access to vapor products.

In relation to these vapour proposals we encourage the FDA to introduce enforceable regulations as soon as possible. Further, we encourage the FDA to bring forward the PMTA deadline earlier than 2022.

In relation to menthol cigarettes, while we will continue to engage with the FDA on its proposed plans, it is important to note that:

• When the FDA first examined menthol in 2013, the published science did not support regulating menthol and non menthol cigarettes differently and the published science since then has not changed this situation.
  
• While some consumers may prefer menthol cigarettes, the science has not demonstrated that menthol leads to higher levels of initiation, greater dependence, reduced ability to quit or increased health risk.
  
• Any regulation of menthol in cigarettes must be done through the established comprehensive rulemaking process and must be based on a thorough review of the science while considering the unintended consequences of any rule. Failing to do so would mean any such action would not withstand judicial review.
  
• Regulating menthol cigarettes (which comprise around a third of the market) differently to non-menthol cigarettes will increase the illegal market, fueling more criminal activity, adding further challenges to criminal and social justice issues. Further, as an illegal market in menthol cigarettes will increase, youth smoking access will increase.

We will continue to work closely with the FDA on these important issues, including participating in a thorough science-based review to address the use of menthol in cigarettes. At the same time, we will continue to deploy our best efforts to curb youth access to vaping and tobacco products."

NOTES TO EDITORS: (Reference to Reynolds refers to the activities undertaken by one or more of companies that comprise the RAI group of companies) 

Measures we already have in place: 

• Reynolds has taken a responsible approach to developing, and subsequently naming, its flavours to ensure they appeal to adult consumers and not children.
• Reynolds age verifies through a third party vendor that all potential online purchases are 21 or older.
• Reynolds is a founding member of 'We Card', an organisation nationally recognised for retailer education and training for age-restricted products.  In 2017, We Card was recognised by 38 state governors.
• Reynolds funds 'Right Decisions Right Now: Be Tobacco Free' (RDRN), a youth tobacco prevention education programme which was started in 1991 and is an evidence-based, independently tested programme for use by middle-school educators, parents and community groups.
• Reynolds currently has a purchase limit of $200 per transaction and plans to implement a more stringent limit of $80 per week and three devices per quarter while instituting purchase pattern monitoring.
• Reynolds has voluntarily implemented specific guidelines that restrict the content of marketing and advertising materials for our vapour products:
  • No testimonials by sports figures or celebrities or any person with special appeal to persons under 21 years of age;
  • No person appearing in any advertising materials shall be under age 25 or be styled to look under age 25;
  • Content shall not include characters, images, or themes designed to target youth;
  • Content shall not be related to youth or youth-oriented activities;
  • Content shall not suggest that use of R.J. Reynolds Vapor Company's ("RJRV") products is essential to social prominence, distinction, success or sexual attraction, nor shall any content picture a person using any RJRV products in an exaggerated manner; and
  • Content shall not depict persons participating in, or obviously just having participated in, a physical activity requiring stamina or athletic conditioning beyond that of normal recreation.

Our presence in the US - by channel and flavours: 

• Reynolds sells vapour products under the VUSE brand name.  The VUSE brands include VUSE Solo, VUSE Ciro, VUSE Vibe and VUSE Alto. 
• VUSE sells 12 flavour varieties with tobacco, mint and menthol flavours accounting for over 70% of our total Vuse volumes (Source: Internal data, shipments to retail (STR), kit cartridges and refill cartridges, YTD 1/1 - 9/23/18)
• Approximately 94% of VUSE consumers are over the age of 25. Moreover, over 60% of our Vuse consumer are over 35 years of age. (Source: Internal data, 1H 2018 Internal Tracker Data)
• The majority of our business for VUSE is through traditional retail and we believe this channel makes up circa 45% of the industry's sales, with over 30% in vape shops and over 20% online.  (Source: Internal data, S&P with McKinsey and PWC)

About British American Tobacco  

• British American Tobacco is one of the world's leading, multi-category consumer goods companies, that provides tobacco and nicotine products to millions of consumers around the world.
• It employs over 55,000 people, with market leadership in over 55 countries and factories in 42. Its Strategic Portfolio is made up of its global cigarette brands and an increasing range of potentially reduced-risk products, comprising vapour and tobacco heating products, as well as oral tobacco and nicotine products such as moist snuff and snus.
• In 2017 the Group generated reported revenue of £20 billion and profit from operations of £6.5 billion. In July 2017, British American Tobacco p.l.c. acquired the remaining 57.8% of Reynolds American Inc. that BAT did not already own, creating a stronger, global tobacco and nicotine company.