British American Tobacco (BAT) plans to cut around a fifth of its 47,000-person workforce this year as the company looks for ways to cut costs and become more “tech-enabled.”
BAT, one of the world’s largest tobacco groups, has announced it will cut 5,500 jobs and outsource a further 3,500 by the end of the year, impacting a total of 9,000 employees.
FTSE 100 companies are grappling with declining demand for traditional cigarettes and pressure to invest in nicotine alternatives.
The company said the cuts were part of a “transformation program” that is expected to save £600m a year by the end of 2028.
BAT CEO Tadeu Marko said the company is building a “future-ready organization” that is “more agile, cost-disciplined and technology-enabled.”
He added: “These changes will impact many of our colleagues and our focus is on supporting them with great care and respect through this transition as we position the business for the future.”
In the United States, the company operates under its subsidiary Reynolds American, and there will be no reductions in its operations.
Last year, BAT partnered with technology consulting firm Accenture to outsource some of its work, which Marco said at the time would give tobacco companies access to the company’s “advanced AI solutions.” BAT said some jobs in the UK, Poland, Romania, Costa Rica, Mexico, Singapore and Malaysia have been absorbed into Accenture since the deal.
In February, BAT’s interim finance chief Javed Iqbal told the Financial Times that the simplification plan would make the company “more digitally and AI-focused”.
BAT, which makes Dunhill and Peter Stuyvesant cigarettes, has also suspended some of its traditional cigarette production. In January, the company announced it would close its eighth largest factory in South Africa, citing competition from illegal trade.
The group predicts that global cigarette industry volumes will decline by about 2.5% this year.
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The London-headquartered and publicly listed company has invested heavily in smoking cessation products such as Vuse e-cigs and Velo nicotine pouches.
The company told investors this month that revenue growth in the “new category” part of the business is accelerating and is expected to grow by mid-teens this year.
BAT stock was down about 1.4% in early trading Monday, but is still up about 11.8% year-to-date. Shares in rival Imperial Brands also fell 1% in early trading Monday.
