British American Tobacco is to cut nearly a fifth of its global workforce – 9,000 jobs – as the cigarette giant races to adapt to a shrinking smoking market. The company, which makes Lucky Strike and Dunhill cigarettes, is shedding 5,500 roles and outsourcing another 3,500. It did not specify where the cuts would fall, but said the US was not affected.
The move comes after BAT earlier this year announced plans to make the business “more digital and AI-focused”. Traditional cigarette sales are declining as smokers increasingly switch to vapes and nicotine pouches. BAT has been shifting its focus to smoking alternatives such as its Vuse vapes and Velo nicotine pouches to drive growth, but its sales and profit margins have been sluggish in recent years.
“British American Tobacco is cutting 9,000 jobs globally to save £600m a year by 2028.”
Sales in the US, its biggest market, have also been hit by the cost-of-living crisis, as smokers swap for cheaper brands. At the same time, the company is battling rising duties and stricter regulations in some markets. American regulators have taken a tough stance on approving licences for new products such as vapes, delaying launches. BAT says this has fuelled an influx of illegal Chinese products, weighing on its sales and market share.
“The tobacco industry has found the transition from cigarettes to next-generation products to be a slow one,” said Dan Coatsworth, head of markets at AJ Bell. “Vaping is now commonplace, yet product manufacturers are battling challenging market conditions caused by a proliferation of illegal products.”
BAT said the cost cuts are expected to save about £600m a year by 2028. Chief executive Tadeu Marroco said the cuts would make the company “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.”
The job cuts, which have already started, are set to be completed by the end of this year.