British American Tobacco (BAT) will cut about 5,500 jobs globally as part of a major restructuring programme aimed at reducing costs and accelerating its shift towards digital technology and artificial intelligence.
The tobacco giant, which manufactures cigarette brands including Lucky Strike and Dunhill, will also outsource a further 3,500 positions as it seeks to streamline its operations. The company did not specify which countries would be affected but said its operations in the United States would not be impacted.
BAT currently employs about 47,000 people worldwide. The company expects the restructuring programme to generate annual savings of approximately £600 million by 2028.
The job cuts come as BAT continues to reposition its business amid declining global cigarette sales, with more consumers switching to alternative nicotine products such as vapes and nicotine pouches.
The company has increasingly focused on growing its portfolio of smoke-free products, including its Vuse vaping devices and Velo nicotine pouches. However, sales and profit margins from these products have remained under pressure in recent years.
BAT has also faced weaker sales in the United States, its largest market, as rising living costs have prompted many smokers to switch to cheaper cigarette brands.
In addition, the company is grappling with higher tobacco taxes and tighter regulations in several markets. It said stricter approval processes for new vaping products, particularly in the United States, have slowed product launches and contributed to the growth of illegal vaping products, mainly from China, affecting its sales and market share.
Commenting on the industry outlook, AJ Bell Head of Markets Dan Coatsworth said the tobacco industry’s transition from traditional cigarettes to next-generation nicotine products has been slower than expected.
“The tobacco industry has found the transition from cigarettes to next-generation products to be a slow one,” he said, noting that manufacturers continue to face stiff competition from illegal vaping products.
BAT said the restructuring programme is already underway and is expected to be completed by the end of this year.
Chief Executive Officer Tadeu Marroco said the changes are intended to make the company “more agile, cost disciplined and technology enabled” as it adapts to changing consumer preferences and market conditions.
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