British American Tobacco (BAT) will cut approximately 9,000 jobs this year, representing about a fifth of its global workforce of 47,000. The Dunhill and Peter Stuyvesant cigarette maker aims to reduce costs and become more “technology enabled” through a transformation programme expected to generate £600m in annual savings by the end of 2028.
Job Cuts and Outsourcing
BAT plans to cut 5,500 jobs by the end of the year and outsource a further 3,500 roles, affecting a total of 9,000 employees. The company said the cuts are part of a broader restructuring to streamline operations and invest in new technologies. There will be no cuts in its US business, which operates under subsidiary Reynolds American.
Last year, BAT partnered with technology consultancy Accenture to outsource some work, granting the tobacco company access to “advanced AI solutions”. Some jobs in the UK, Poland, Romania, Costa Rica, Mexico, Singapore and Malaysia have already been absorbed by Accenture since the deal, BAT confirmed.
CEO Statement and Transformation
BAT chief executive Tadeu Marroco said the company is “building a future-ready organisation” that is “more agile, cost disciplined and technology enabled”. He added: “These changes affect many of our colleagues, and we are focused on supporting them through this transition with care and respect, as we position the business for the future.”
In February, interim finance chief Javed Iqbal told the Financial Times that plans to simplify the company would make it “more digital and AI-focused”.
Declining Cigarette Demand
BAT is grappling with falling demand for traditional cigarettes and pressure to invest in nicotine alternatives. The group has predicted that global cigarette industry volumes will fall by about 2.5% this year. In January, BAT announced it would close its eighth largest factory, located in South Africa, due to competition from illicit trade.
The company has been investing heavily in smoke-free products such as Vuse vapes and Velo nicotine pouches. It told investors this month that revenue growth in these “new categories” was accelerating, with mid-teen percentage growth expected this year.
Market Reaction
Shares in BAT fell by about 1.4% in early trading on Monday, though they remain up by about 11.8% year to date. Shares in rival Imperial Brands also fell by 1% in early trading on Monday.
