Shares in British American Tobacco fall on Vuse Alto sales bans

LONDON (Reuters) - Shares in British American Tobacco fell more than 2% on Friday after the U.S. health regulator banned sales of some flavours of its key vape brand in the country, Vuse Alto.

The U.S. Food and Drug Administration (FDA) said on Thursday it had issued marketing denial orders for three menthol flavoured and three mixed berry flavoured Vuse Alto e-cigarette products sold by R.J. Reynolds, a subsidiary of BAT.

BAT said it would immediately challenge the decision and seek a stay of enforcement on the menthol ban.

Vuse Alto is BAT's main vape brand in the United States. It makes up the vast majority of its vape volumes in the country, with its menthol flavour in particular accounting for around 75% of its U.S. vape sales, Owen Bennett, analyst at Jefferies, estimated in a note on Thursday.

He added that the market was largely expecting the FDA to block Vuse Alto menthol sales, but BAT would likely be able to secure a temporary suspension of the order while it challenges the decision. Vuse Alto tobacco flavours remain under review by the FDA.

Others have had some success challenging FDA decisions, including rival Imperial Brands, whose U.S. subsidiary challenged the FDA's move to block sales of some flavoured and unflavoured vape products.

In August, a U.S. appeals court agreed that Imperial's unflavored products should be reviewed again by the FDA.

Imperial's shares also fell on Friday, and were down 1.3% at 0834 GMT.

BAT shares are down more than 25% this year.

(Reporting by Emma Rumney; Editing by Susan Fenton)