British American Tobacco (BAT), the world's largest tobacco company, is striving to become a 'predominately smokeless' business by 2035, a goal that experts say is under 'sharp focus' as regulatory pressures and shifting public attitudes toward smoking intensify.
The company, listed on London's FTSE 100 index, is set to publish its half-year financial results on Tuesday, bringing the challenges facing the industry to the forefront. For several years, BAT has been pivoting away from traditional cigarettes toward newer products such as vapes and nicotine pouches to adapt to changing market dynamics.
Despite this strategic shift, smokeless products accounted for only about 18% of the group's total revenues last year. The bulk of its income—£20.2 billion—came from cigarette sales, including iconic brands like Lucky Strike, Pall Mall, and Dunhill. In contrast, new category products, including the Vuse vape brand and Velo nicotine pouches, generated £3.6 billion.
BAT maintains that it is attracting millions of additional customers annually for its smokeless offerings. At the start of 2026, the company forecast total revenue growth of 3% to 5% for the year, with double-digit expansion in new category products. Investors will be closely monitoring any updates to this guidance when the results are released.
Richard Hunter, head of markets at Interactive Investor, noted: 'BAT is continuing to position itself to reflect the changing landscape of smokeless products, while navigating an ever-growing number of hurdles. The pressure on traditional tobacco products has been in evidence for some considerable time, driven both by changing lifestyle habits as well as increasing regulation.'
He added that governments have increasingly toughened their stance on tobacco sales, particularly to young people, compounding the regulatory challenges that have long plagued the sector. 'In addition, and quite apart from this general decline in traditional tobacco products sales as health issues come to the fore, there is a reluctance among some investors to invest in the sector at all on ethical grounds.'
Hunter emphasized that these issues are in 'sharp focus' for investors, who will be looking for tangible progress on BAT's transition toward a smokeless future.
