British American Tobacco (BAT) has announced plans to slash nearly a fifth of its global workforce, eliminating 5,500 roles and outsourcing 3,500 others. This massive restructuring comes as the tobacco giant battles shrinking traditional cigarette sales and seeks to accelerate its transition to digital, AI-driven operations and smoke-free alternatives.
The job cuts, which have already begun, are slated for completion by the end of this year. Chief Executive Tadeu Marroco stated the move will make the maker of Lucky Strike and Dunhill “more agile, cost-disciplined and technology-enabled” while generating £600 million ($760 million) in annual savings by 2028.
BAT is actively shifting its focus to next-generation products, such as Vuse vapes and Velo nicotine pouches. However, this transition has proven slow and costly. In the US, BAT’s largest market, high inflation has forced consumers to trade down to cheaper cigarette brands, hurting profit margins.
Furthermore, regulatory bottlenecks in the US have delayed approvals for BAT’s new vape products. According to the company, these regulatory delays have fueled a massive influx of illegal Chinese disposable vapes, severely impacting BAT’s legal sales and market share.
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