Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
On Thursday the Sun saw leaked UK government policy documents that revealed it was considering banning tobacco sales to those born on or after 2009 (old news) but also in addition restrictions on outdoor smoking in pavements, clubs, restaurants and parks (new news). Legislation was also being considered to target vapers and shisha bars with only exception being private homes and large open spaces.
When UK's PM, Starmer, was asked about it in a presser he responded with; "My starting point on this is to remind everybody that over 80,000 people lose their lives every year because of smoking. That is a preventable death, it’s a huge burden on the NHS and, of course, it is a burden on the taxpayer. So, yes, we are going to take decisions in this space, more details will be revealed, but this is a preventable series of deaths and we’ve got to take action to reduce the burden on the NHS and the taxpayer."
Members on the right - including Nigel Farage - were quick to form conclusions for the future of UK pubs saying it would be the end of them. Seems a exaggeration at best - NHS estimated only 13% of the UK population smoked in 2022 and has been on a one-way decline (see below). JD Weatherspoon's founder - a UK and Irish pub company - commented he doesn't see big impact while trade body, UKHospitality protested "you only have to look back to the significant pub closures we saw after the indoor smoking ban to see the potential impact it could have". On latter we'd note that 2007 introduced indoor ban was when over 20% of UK adults smoked.
How much of the regulation will extend to vapes seems unclear from the Sun's source piece, but some other sources have reported they are not being considered for any outdoor bans. We'd note vaping even indoors is still legal in the UK - though many operators of venues choose to ban it. On Cannabis, it is still illegal in the UK (despite having reported lower health and social costs) and there is no indication Starmer is open to legalisation. It hasn't stopped UK headquartered tobacco co's (like BAT) from investing in it. Germany was the most recent in the EU to legalise but (as far as we know) we are still short of any pure-play cannabis credit issuers (unlike in $s).
- Tobacco exposed: 12% of Imperial's revenues are from the UK and indicative of significant market share. Japan Tobacco has a 44% market share but contributes small amount to group revenues (Western Europe as whole is only 23% of Tobacco sales).
- Less exposed: BAT revenue looks small with UK market share at only 8%, PM indicative to us is small, Altria none.
- Pub exposed (we question size of any impact); Stone Gate (STONPB) in €/£ HY, Punch Pubs (PUBLN) in £HY and Marstons (MARSLN) in £HY.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.