Historic legislation to curb smoking in the US, the world's second-largest tobacco market after China, passed the country's Senate yesterday, heralding a clampdown on advertising and a ban on flavoured products.
The Family Smoking Prevention and Tobacco Control Act, stalled for almost a decade because of opposition in tobacco-growing states, now looks set to become law within days, marking a defeat for the lobbying efforts of Reynolds American, the makers of Camel cigarettes and the No 2 manufacturer in the US. The company is 42 per cent-owned by the UK's British American Tobacco.
The new legislation gives the Food and Drug Administration power to regulate tobacco, and commands it to impose bigger health warnings on packets, to ban flavoured cigarettes, possibly including menthol, and to limit advertising that glorifies smoking.
"Joe Camel will be given a life sentence and put away forever," said Richard Durbin, Senator for Illinois, in a reference to the cartoon image used by Reynolds in its advertising. "We're going to give our kids and families across America a chance for a better life."
Two FTSE 100 firms could be impacted by the legislation. As well as British American Tobacco, Imperial Tobacco entered the US tobacco market through the acquisition of Commonwealth Brands in April 2007. Fitch, the rating agency, said this week that firms with the biggest market share would benefit, as the cost of inspections would be more difficult to bear for smaller manufacturers.
Every second cigarette smoked in the US is made by Altria, owner of the iconic Marlboro brand, which campaigned in favour of FDA regulation.