(Reuters) -The U.S. health regulator on Thursday blocked the sale of six flavors of British American Tobacco's (BAT) main vape brand, Vuse Alto, in the market including the menthol flavor that makes up a large portion of its sales.
The U.S. Food and Drug Administration's (FDA) marketing denial orders (MDOs) for R.J. Reynolds, owned by BAT, include three menthol-flavored and three mixed berry-flavored e-cigarette products, with each flavor being offered in three nicotine strengths.
"R.J. Reynolds Vapor company intends to challenge denials and will seek a stay of enforcement of menthol denial immediately," BAT said.
According to the FDA, evidence submitted by R.J. Reynolds "did not demonstrate that the menthol- and mixed berry-flavored products provided an added benefit for adults who smoke cigarettes — in terms of complete switching or significant smoking reduction — relative to that of tobacco-flavored products that is sufficient to outweigh the known risks to youth".
But the company may submit new applications for the products that are subject to these MDOs, it said.
In the past, companies have challenged FDA decisions in court, with some success.
A subsidiary of rival Imperial Brands had disputed the FDA's decision to ban its flavored and unflavored vape products. A U.S. appeals court in August agreed that its unflavored products should be reviewed again by the FDA.
Vuse Alto makes up the vast majority of BAT's vape volumes in the U.S., with menthol flavors accounting for around 70% of that, Jefferies said in a March 2023 note.
A rise in disposable vapes has dented BAT's business in the world's largest market for such products. Its U.S. vape volumes were down 6.5% in the first half of 2023.
BAT bought out R.J. Reynolds for $49.4 billion in 2017, gaining access to the lucrative and highly regulated U.S. market after a long absence since 2004.
(Reporting by Savyata Mishra in Bengaluru and Emma Rumney in London; Editing by Shilpi Majumdar)
