In a strategic move to enhance efficiency, British American Tobacco (BAT) has announced plans to reduce its workforce while ramping up its digital transformation efforts. This announcement follows the company’s latest financial report, which revealed a modest decline in overall revenues but notable growth in its emerging product categories.
Job Cuts and Digital Focus
BAT’s interim finance director, Javed Iqbal, confirmed that the company will implement “productivity initiatives” aimed at simplifying operations. While the exact number and locations of job cuts remain undisclosed, the initiative is part of the broader Fit2Win programme launched last year, which targets £600 million in cost savings by 2028.
The company, which operates across more than 140 markets and employs approximately 49,000 people worldwide, is prioritising a shift towards a more digital and AI-integrated business model. This approach reflects a growing trend among large corporations to leverage technology for increased productivity and efficiency.
Financial Performance Overview
Despite a slight dip in total revenues, which fell by 1% to £25.6 billion in 2025 compared to the previous year, BAT’s performance in new product categories has been impressive. Revenue from these segments grew by 5.5%, reaching £3.62 billion, largely driven by heightened demand for its Velo oral nicotine products.
Notably, sales from BAT’s modern oral segment surged by an astonishing 47.4% year-on-year, signalling robust growth in key markets such as the US, Scandinavia, the UK, and Switzerland. This surge has mitigated declines seen in the vaping sector, which has been challenged by the proliferation of illicit products, particularly in North America, alongside regulatory changes impacting excise taxes.
Leadership Confidence
Tadeu Marroco, BAT’s Chief Executive, expressed optimism regarding the company’s trajectory, stating, “I am pleased with our accelerating momentum through 2025, enabling full-year delivery at the top end of our guidance.” He reaffirmed the commitment to delivering sustainable shareholder value through consistent cash returns, including a £1.3 billion share buy-back programme slated for 2026.
Despite these positive developments, shares of BAT fell by 1.1% on Thursday morning, reflecting market apprehension amid ongoing structural changes.
Why it Matters
BAT’s decision to streamline operations through job cuts and increased reliance on technology underscores a pivotal shift within the tobacco industry. As the company adapts to evolving consumer preferences and regulatory landscapes, its ability to balance traditional revenue streams with innovative product offerings will be crucial. The success of this transformation could set a precedent for other firms in the industry, making it a significant development to watch as the market landscape continues to evolve.
