Is the entrance of British American Tobacco (BAT) into the CBD sector a positive or negative for the industry?

The top-line answer is that it is wholly neither. There are elements of both in any position taken on the news. BAT’s entrance into the market with its vaping product under the Vuse brand (coming in three flavours – mint, mango and berry – and two strengths – 50 mg at £9.99 and 100 mg at £14.99) would be priced at the higher end of the CBD vape pricing spectrum. This means that it is unlikely to undercut established brands through price alone – something BAT could have easily done given its economies of scale and advantages in areas like distribution, plus its deep pockets that could fund a loss leader no matter its assorted costs.

It also appears unlikely that the new product would appeal to established CBD users. Comments from BAT coupled with its choice of convenience store and online retail channels – an unsurprising choice given that is where its experience lays – points to BAT’s existing vaping base, as well as new users making spontaneous purchases, being the primary target groups.

But in the glass half empty column, a move by BAT could be a signal that other major corporations – including perhaps some of the other Big Tobacco brands such as Imperial, which has previously shown interest in the cannabinoid arena – are finally making their move to become active players in the market. This could signal a shift in the market makeup – similar to what was seen in the vapour market after the entrance of Big Tobacco – with significant M&A activity coupled with smaller companies being pushed out.

Feel free to submit your questions for our next blog post*

*Under CBD-Intel’s editorial discretion

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