British American Tobacco Announces Large Job Cuts in Technology Shift

British American Tobacco (BAT), one of the world’s largest tobacco companies, has announced a major plan to cut 9,000 jobs. This move represents nearly one-fifth of its total global workforce of 47,000 people. The company, which produces well-known cigarette brands like Lucky Strike and Dunhill, is making these changes to lower costs and become a more digital, technology-focused business.

According to the BBC, the plan includes removing 5,500 roles completely and moving 3,500 other jobs to outside companies. This process, known as outsourcing, is part of a larger effort to save the company £600 million annually by 2028. The company confirmed that these cuts have already started and are expected to be finished by the end of this year. Importantly, the company noted that its operations in the United States will not be affected by these job losses.

The Guardian reports that BAT is trying to build a future-ready organization that is more agile—meaning faster and more flexible—and disciplined with its spending. Chief executive Tadeu Marroco stated that the company is focused on supporting employees through this difficult transition with care and respect. These changes are part of a broader "transformation programme" designed to help the business adapt to a changing market.

This announcement follows a difficult period for the tobacco industry. Traditional cigarette sales are shrinking globally as more smokers switch to alternative products like vapes and nicotine pouches. BAT is currently investing heavily in these "new categories," such as its Vuse vapes and Velo nicotine pouches, to drive future growth. While the company says revenue in these new areas is growing, the overall transition from cigarettes to these new products has been slow, according to Dan Coatsworth of AJ Bell.

Beyond the shift in consumer habits, the company is facing several other challenges. The Guardian noted that BAT is dealing with falling demand for traditional cigarettes and is closing some of its older factories, such as a major site in South Africa. Additionally, the company is struggling with rising taxes and stricter government rules in many countries. In the United States, BAT has faced delays in getting approval for new products. The company claims that these delays have allowed illegal, low-cost products from China to enter the market, which has hurt its own sales and market share.

Economic factors are also playing a role. The BBC reported that in the United States, which is BAT’s largest market, the rising cost of living has caused many smokers to switch to cheaper, lower-quality brands. This pressure on household budgets has made it harder for the company to maintain its profit margins. To address these issues, BAT has been working with technology partners like Accenture to use advanced artificial intelligence (AI) solutions. By using AI, the company hopes to simplify its operations and become more efficient.

Despite the scale of the job cuts, the company remains focused on its long-term goals. While shares in BAT fell slightly following the news, the company’s stock has generally performed well over the past year. Investors are watching closely to see if this new strategy will successfully turn the business around. As the company moves away from its traditional roots, the success of its smoke-free products will likely determine its future in a market that is becoming increasingly digital and strictly regulated.