Jim Armitage: Watchdogs step in to stop Big Tobacco making a mint

To the committed smoker, few trials in life surpass the dilemma posed by a heavy cold.

Your dedication to the habit requires you to light up, yet your sore throat makes the standard ciggie too harsh to contemplate.

What to do? Prove your dedication with a painful Marlboro Red or go cold turkey and spend the day growling at your colleagues?

But there’s an alternative: the menthol cigarette. Despite being jammed full of tar and the 70 other known carcinogens in normal fags, menthol smoke goes down cool and smooth, even on a raw throat.

For Americans, it seems, no longer. Regulators there are set to ban menthols for the same reason I recall from my old smoking days: they take the challenge out of smoking.

The authorities have decided menthols make it easier for children to pick up the habit. As if that weren’t bad enough, there’s a nasty racial element to minty fags, too; they’re particularly popular among African Americans, arguably because of years of deliberate marketing.

Now, in the wake of bans in Canada and California, and planned curbs in the European Union, the US Food and Drug Administration is set to kill the minty weed.

For BAT, that’s a choker. Morgan Stanley analysts reckon 25% of its profits come from US menthols. BAT’s Newport is the biggest selling menthol in the US, and its Camel brand comes in mint too. Imperial Brands will also be hit; Kool and Salem are big menthol sellers.

All the more galling for Big Tobacco is that previous administrations had considered and rejected a ban, but the FDA’s present commissioner, Dr Scott Gottlieb, says that was a mistake.

Gottlieb is also set to clamp down on flavoured e-cigarettes; another big market for BAT, which has pushed into vaping to compensate for falling cigarette sales.

The thinking is that vaping — particularly fun-sounding flavours such as chicken-and-waffles — encourage kids to get into e-cigs, which in turn serve as a gateway for real cigs. Profit-wise, that clampdown will affect the vaping specialists such as Juul Labs more than BAT, which focuses on mainstream flavours.

But just look at the direction of travel. Decades on from slaying the multi-billion dollar dragon of litigation over smoking-related diseases, Big Tobacco once again finds itself subject to shock decisions by the authorities. And that despite BAT-Reynolds spending $1.8 million and $5.5 million a year on lobbying.

Since the cancer litigation settlements of the late Nineties, Big Tobacco shares have been considered defensive stocks for investors; large, reliable cashcows paying large, reliable dividends.

No more. BAT shares crashed 11% at one stage today, Imperial Brands nearly 5%. We haven’t seen the sector fall like that for nearly 20 years.

Time to revisit tobacco’s safe-haven status. Jittery investors might want to reach for a soothing menthol, while they still can.