British American Tobacco is slashing roughly 9,000 jobs, or nearly one-fifth of its global workforce, as part of an aggressive cost-cutting and restructuring drive. The cuts include 5,500 layoffs and 3,500 outsourced roles by year-end, excluding its U.S. subsidiary Reynolds American. The company aims to achieve £600 million in annual savings by 2028, with most of that delivered by 2027. Shares dipped on the news, with analysts noting the scale of reductions is larger than markets expected.
The restructuring reflects BAT's urgent pivot from declining traditional cigarette sales toward smoke-free alternatives like Vuse vapes and Velo nicotine pouches. The company is closing factories, including its eighth-largest plant in South Africa, and leveraging AI and data analytics to further reduce headcount. Partnerships with Accenture and Systems Ltd. have moved service center roles in multiple countries, signaling a deep operational overhaul. CEO Tadeu Marroco emphasized supporting affected employees through the transition.
BAT is not alone: rivals Imperial Brands and Philip Morris International are pursuing similar cost-saving programs to fund growth in nicotine alternatives. Imperial targets £320 million in annual savings by 2030, while PMI is halfway to $2 billion in cuts by 2026. BAT’s U.S. performance, boosted by Velo Plus pouches, has helped it meet targets despite global volume declines. What to watch next: whether BAT’s aggressive workforce reduction accelerates its revenue shift to smoke-free products and how investor sentiment evolves as savings materialize.
Key Takeaways
- BAT is cutting 9,000 jobs, roughly 20% of its workforce, in a restructuring that surprised markets.
- The cost-saving program targets £600 million annually by 2028, with most savings by 2027.
- The pivot reflects falling cigarette demand and a strategic push into vapes and nicotine pouches.
- Rivals Imperial Brands and PMI are also slashing costs to fund growth in smoke-free alternatives.
Insights & Analysis
- The scale of job cuts signals that legacy tobacco firms see no near-term recovery in cigarette volumes, forcing deep structural changes rather than incremental adjustments.
- Outsourcing and AI adoption suggest BAT is building a leaner, tech-driven operating model that could set a new cost baseline for the industry, pressuring competitors to follow suit.