Tadeu Marroco: Okay. On the IP deal with PMI was primarily related to settle all this pending case that we have around the globe, and we did that, it’s important to say without any compensation, monetary compensation. So for us immediately this reflects into the case that we had against Vuse Alto in Virginia, in the U.S, also a number of litigations that were in dispute around glo in Europe and also Vuse in Germany, to mention some. Now this deal also gives us for both companies actually to give peace of mind for us to be focused on developing and accelerating the Tobacco Harm Reduction agenda and innovate according to that. So we’re going to have more freedom to do it in the future, and this will be very positive not just for BAT but also for the industry as a whole because I think that, all the industry wants actually to have a better prospect of with the different stakeholders around, how important it is that Tobacco Harm Reduction gets accelerated in the many jurisdictions.
So this was a strong step forward, I have to say. The Combustible business, yes, you are right, it’s difficult for me. But at the end of the day, I’m trying to and anyone can be doing this type of analogy. It’s a lot of the downsides we are seeing today is related to the macroeconomics. And then the macroeconomics, my expectation for next year is to improve compared with this year because we are seeing already discussions around eventually, interest rates start to reduce, we know that there is a correlation between consumer confidence and sales of cigarettes. And once we have seen the past that once interest rates start coming down, the whole sentiment change and eventually, the confidence can recover back and this will have a positive impact on cigarettes.
So the assumption is that next year will be better. And for sure, one thing that is a big unknown, like I said before, it’s the enforcement around Modern disposal, which also impacts the Combustible side. But from the macro point of view, we would expect the business to improve from ’25 onwards.
Victoria Buxton: I believe we’ve got another question from the line.
Operator: Yes. The next question goes to Jonathan Leinster of Societe Generale. Jonathan, please go ahead. Your line is open.
Jonathan Leinster: Okay. Thank you and good morning, gentlemen. Yes, few questions if I may. First of all, the launch of the glo Hyper Pro, I mean you mentioned that as a premium product. Does that mean it’s actually going to be priced differently from previous iterations and are the consumables any different? So is this a sort of step up to try and avoid the sort of price discount we’ve seen in some of the key markets in terms of the sort of Mainline glo Hyper?
Tadeu Marroco: Yes, Jonathan, the device is already being priced at a higher price compared with the previous one. Clearly, it’s a much improved device, and we have space for that. So this is one. The consumables will be improved consumables and this question depends a lot on the circumstance of each market. It’s very difficult to give a kind of one size fits all answer to that. We have something in our hands that we believe that is much improved compared in terms of consumer compared with the past. And we want to reassess always, there is a lot of activities in the below WAP as we speak today in Tobacco Heating Products. So it’s not just a question of what we want to do, it’s how we see the competitive landscape as usual in this case.
Victoria Buxton: I’m afraid we’re out of time. Jonathan, sorry, I’ll let you finish your questions.
Tadeu Marroco: I think he has another one. Yes, Jonathan.
Jonathan Leinster: Yes. Okay. Very quickly, well probably not that quick. On the Vaping markets across internationally, there’s been a number of countries that have sort of formalized the market having previously been sort of a bit of a gray area. Is that something that — is there major markets out there, which you expect to sort of formalize the vaping markets, which would represent a real opportunity to you?
Tadeu Marroco: Well, we are seeing, we are encouraging to see some markets taking the Tobacco Harm Reduction in a very prominent basis, we just saw, for example, New Zealand very supportive of vaping, which is very favorable. Even the U.K., they want to regulate further, but they have all in mind that it’s a very important tool to reduce incidence of smokers in general. Canada is the same. It’s a question of how you finetune the regulation. We are seeing more recently accounts like Chile, where we’re expecting at any time them to open up the market for Vapour. And we note that there are discussions in big markets like Brazil, for example, they have a public consultation running as we speak in terms of, if they will regulate or not Vapour.
Turkey is another big market. In our current assumptions, we are not expecting any of those big markets to make big moves in the short term. But we expect this as we progress to and this is one focus area, like I said the sustainable future is about that. We expect to have more and more evidence based science, fact based points to engage with all of those different authorities, governments in order to be able to unlock the potential that could make a tremendous positive impact for the currency smokers in those markets.
Jonathan Leinster: Okay. Thanks.
Tadeu Marroco: Thank you very much.
Victoria Buxton: So as I was saying, I’m afraid we’ve run over time, but I think we’ve got one more question on the line which we will take.
Operator: Thank you. The next question go to Joffrey Bellicha Meller of Bank of America Merrill Lynch. Joffrey, please go ahead. Your line is open.
Joffrey Bellicha Meller: Thank you very much and thank you for taking the time. I have a couple of questions. The first one is on ITC’s hotel demerger, I was wondering how you were thinking about your future stake in that company and if you would be immediately disposing it, assuming that you get the regulatory approvals for it. And the second question is on the U.S. Combustibles margins, when you discussed about the laddering of the products, are the introduction of the soft packs for example with Newport as margin at the same level of margin as your regular Newport products? Thanks very much.
Tadeu Marroco: Okay, so Joffrey, the first question, what I have said to you is that there is no strategic intent from BAT to be a minority shareholder of a hotel in the Indian market. Now you have to bear in mind that they are floating 60% of the hotel business, it is floating 6% of their hotel business. Early to know exactly the timing of that, we expect to be more towards the end of the year, and the decision around what to do with the stake will be take on board by the board when it comes to time. And so I’m going to leave the question on the hotel. The second one is the laddering in Newport. We cannot keep the same level of margins of the price at the very top. But more important, when we consider the level of cannibalization that we have and more importantly, retention of consumers, we think that is a very positive move and that’s why we have pilots, we have taken our conclusions and then we start to roll out throughout 2024.
Victoria Buxton: Thank you very much, Tadeu and Javed. And many thanks to everybody for all your questions. I apologize that we haven’t managed to get to the questions online, but we the IR team will be responding to those later on today. And with that, I’ll hand back to Tadeu for closing remarks.
Tadeu Marroco: Okay. Thank you all for listening today. To close, while there is still more to do, I’m confident the investment choice we are taking will take a sharp execution and build the foundation for long-term growth and value creation. Thank you again for joining us today. I look forward to keeping you updated as our progress and we build as more closely work together.
