British American Tobacco PLC (LSE:BATS) and other Big Tobacco players are tapping the tea market to counter European bans on flavoured heated tobacco products and falling demand for traditional cigarettes.
BAT has introduced a tobacco-free nicotine-infused heated rooibos tea product in nine European markets, and plans to roll them out globally, according to a Reuters report.
Heated smoking products made without tobacco are not subject to existing European Union regulations prohibiting flavoured smoking products, meaning BAT can sell them infused with menthol and other fruity flavours.
It forms part of Big Tobacco’s push to diversify revenue streams in Europe, especially in the UK, where Prime Minister Rishi Sunak vowed to make smoking illegal for future generations.
BAT, Imperial Brands PLC (LSE:IMB) and other prominent tobacco companies have already ventured into the vaping industry, but this sector, too, faces a crackdown.
These regulatory moves are driven by concerns about the health impacts of vaping and the need to protect young people from nicotine addiction.
However, there are also health concerns in relation to inhaling heated tea like rooibos.
"Anything that burns or is vaporised... and inhaled into the lungs, probably will cause some effects," Erikas Simonavicius, a research associate at King's College London told Reuters.
US multinational Philip Morris is also planning to roll out tobacco-free heated products later this year, but has yet to disclose what the key ingredients will be.