British American Tobacco to cut 9,000 jobs

British American Tobacco (BAT), the company known for brands like Lucky Strike and Dunhill, has announced plans to reduce its global workforce by nearly 20%. This significant restructuring involves cutting 5,500 positions while also outsourcing an additional 3,500 roles as part of a broad cost-saving initiative.

Earlier this year, BAT revealed its intention to enhance its operations by becoming “more digital and AI-focused.” Although the company has not specified which regions will experience the job reductions, it clarified that the United States workforce will remain unaffected. Currently, BAT employs around 47,000 people worldwide, and the company expects these measures to yield annual savings of around £600 million by 2028.

The broader context for these changes stems from declining sales of traditional cigarettes, as consumers increasingly turn to vaping products and nicotine pouches. BAT is pivoting towards these alternatives, particularly focusing on its Vuse vape brand and Velo nicotine pouches, to stimulate growth. However, performance in terms of sales and profit margins has been subdued in recent years. Challenges in the US market, BAT’s largest, include consumers opting for cheaper cigarette brands amid rising living costs.

Moreover, BAT is contending with stricter regulatory environments and increased taxes in various markets. In the US, regulators have imposed stringent requirements on approval processes for new products like vapes, causing delays that have unintentionally boosted the presence of illegal Chinese imports. This influx has had a negative impact on BAT’s sales and market position. The company has begun the job reduction process and aims to complete it by year-end. CEO Tadeu Marroco emphasized that the workforce reduction will help create a “more agile, cost disciplined and technology enabled” company. He stated, “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.

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