Major tobacco company plans to cut thousands of jobs
British American Tobacco (BAT) has announced plans to significantly reduce its workforce as it pivots towards technology-driven operations aimed at cost efficiency and enhanced profitability. In an initiative that could impact approximately 9,000 employees globally, the company is expecting to cut around 5,500 jobs while outsourcing an additional 3,500 positions to third-party firms, highlighting a strategic shift in the tobacco industry’s approach to modern challenges.
The decision comes at a time when traditional tobacco products, such as those produced under the well-known Lucky Strike and Dunhill brands, are seeing a prolonged decline in demand. This shift can largely be attributed to the increasing popularity of smoking alternatives, which has forced BAT to rethink its business model. The restructuring plan aims to generate an estimated annual savings of 3 million by 2028, with significant cost reductions expected by the end of 2027.
CEO Tadeu Marroco emphasized that these changes are designed to make BAT more agile and technologically proficient. The company has been grappling with slow sales and profit growth in recent years, often falling short of targets set by company stakeholders. BAT’s objective moving forward is to achieve a revenue growth rate of between 3% and 5% in the coming years.
As part of its transformation, BAT has already begun streamlining its operations over the past 18 to 24 months, which included the recent closure of a factory in South Africa. The tobacco giant predicts a 2.5% decline in sales for traditional tobacco products across the industry this year, prompting a strategic focus on alternative nicotine products such as Vuse vapes and Velo nicotine pouches. Despite this shift, BAT has faced challenges in keeping pace with competitors like Philip Morris International.
Regulatory scrutiny in the United States has also added another layer of complexity for BAT, with drawn-out approval processes for new products, which have resulted in an influx of unregulated products from other markets, undermining BAT’s sales and market share.
The company’s restructuring efforts are ongoing, with BAT confirming that many of the changes have already been communicated to affected employees, while consultations continue in line with local labor regulations. The move signals a broader trend in the tobacco sector as it adapts to shifting consumer preferences and regulatory landscapes.
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