British American Tobacco to cut 9,000 jobs this year: Move aimed at cost reduction and AI adoption; global cigarette volumes projected to fall by 2.5%
London-based British American Tobacco, one of the world’s largest tobacco companies, is set to cut approximately one-fifth—or about 20%—of its total workforce of 47,000 employees this year.
The company has announced plans to eliminate 5,500 jobs and outsource another 3,500 roles by the end of the year to reduce costs and become a technology-enabled organization, affecting a total of 9,000 employees.
The FTSE 100-listed company is currently facing the challenge of declining demand for traditional cigarettes alongside pressure to increase investment in alternative nicotine products (such as vapes and pouches).
Targeting annual savings of £600 million
The company stated that these job cuts are part of its ‘transformation program.’
It expects to achieve annual cost savings of £600 million by the end of 2028.
The company manufactures popular cigarette brands such as Dunhill and Peter Stuyvesant.
CEO says: We are building a future-ready organization
BAT Chief Executive Officer (CEO) Tadeu Marroco stated, “We are building a future-ready organization that is more agile, cost-disciplined, and technology-enabled.”
“Many of our colleagues are affected by these changes, and we are focused on supporting them with care and respect during this transition as we prepare the business for the future.”
No layoffs in the US; Accenture to handle operations
The company clarified that there will be no layoffs in its US operations, where it functions through its subsidiary, Reynolds American. Last year, BAT partnered with the technology consultancy firm Accenture to outsource some of its operations.
At the time, CEO Marroco stated that the deal would grant the company access to Accenture’s advanced AI (Artificial Intelligence) solutions. According to BAT, following this agreement, Accenture has taken over certain roles previously handled in-house across the UK, Poland, Romania, Costa Rica, Mexico, Singapore, and Malaysia.
Preparing to Make the Business Digital and AI-Focused
In February, BAT’s interim finance chief, Javed Iqbal, told the *Financial Times* that plans to streamline the company would transform it into a more digital and AI-focused entity.
Amidst declining demand for traditional cigarettes, BAT has also begun shutting down some of its conventional cigarette manufacturing plants.
In January of this year, the company announced the closure of its eighth-largest factory, located in South Africa, due to stiff competition from the illicit trade.
Global Cigarette Volume Projected to Fall by 2.5%
The group projects a decline of approximately 2.5% in global cigarette industry volumes this year. Consequently, the London-listed and headquartered company is now investing heavily in smoke-free products, such as Vuse vapes and Velo nicotine pouches.
Earlier this month, the company informed investors that revenue growth in this “New Categories” segment is accelerating, with an expected growth rate of around 15% for the year.
