(Bloomberg) -- A wave of illegal vapes arriving in the US from China is hurting sales of legal cigarette alternatives, according to the chief executive officer of British American Tobacco Plc.
Tadeu Marroco called for higher penalties to be levied on those who import unauthorized vapes to the US. “What we are seeing with the lack of enforcement is a reduction of the legal market of vapor,” he said.
BAT is among the tobacco producers awaiting a long-delayed review of the vaping industry by the US Food and Drug Administration, designed to clean up a market crowded with fruit and candy-flavored products from China that are attracting younger users. BAT is a key player in vaping around the world and in the US with its Vuse brand.
The delay is leading manufacturers of illicit products to take advantage of the uncertainty by continuing to sell them, Marroco said. The FDA needs to “decide publicly what are the products that are allowed to stay in the market and the products that need to be taken out of the market,” he added.
Brian King, director of the FDA’s Center for Tobacco Products, said in an emailed statement that “the vast majority of products without authorization are at risk of enforcement action such as a seizure, injunction or civil money penalties.”
The FDA and US Department of Justice have formed a federal task force spanning multiple agencies to stop the distribution of illegal e-cigarettes. As of early June, the FDA had issued 1,100 warning letters to makers, importers and distributors of unauthorized new tobacco products, including e-cigarettes, and fined more than 55 manufacturers and 140 retailers.
BAT has launched two claims with the International Trade Commission, one related to patent infringement and another about the importation and marketing practices of illegal vapes.
The company reported first-half results earlier Thursday, in which it said it’s unlikely to hit a £5 billion ($6.4 billion) revenue target in 2025 for vapes, heated tobacco and nicotine pouches, blaming the lack of a US clampdown on illicit products.
(Updates with FDA comment in fifth paragraph.)
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