Cigarette use is at an all-time low. A tobacco giant pivots to new addictive products
As fewer and fewer people look to get their nicotine fix from traditional cigarettes, one of the world’s largest tobacco companies is trying to keep up.
British American Tobacco, known for brands like Pall Mall and Lucky Strike, says it is cutting 20% of its 47,000-person workforce. The goal is to cut 5,500 jobs by the end of this year and outsource another 3,500.
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American Tobacco predicts that global sales volumes of traditional tobacco products will drop 2.5% this year.
The company says the cuts are part of a larger effort to save about $793 million in annual costs by 2028. The cuts will not impact jobs in the United States, where British American operates under its subsidiary, Reynolds American.
‘Future-ready’ tobacco
The job cuts and outsourcing come as the company faces declining demand for traditional cigarettes and looks for ways to invest in alternatives.
In a statement, Chief Executive Tadeu Marroco said the company is “building a future-ready organization” that will be “more agile, cost-disciplined and technology-enabled.”
The company has already invested in smoke-free products like Vuse vapes and Velo nicotine pouches.
Like its competitor Philip Morris, BAT is looking to generate more than half its future revenue from smokeless nicotine products, according to Bloomberg. BAT says its goal is to be “predominantly smokeless” by 2035.
The interim chief financial officer, Javed Iqbal, told the Financial Times in February that the use of artificial intelligence and data analytics tools would also affect staffing levels. BAT already outsourced some of its work to Accenture, a consulting company that helps businesses modernize, last year.
Morocco said the deal gave BAT access to Accenture’s “advanced AI solution.” Since then, BAT says jobs in seven countries have been absorbed.
What’s driving the change?
A study published in the The New England Journal of Medicine in March found that cigarette use among U.S. adults hit an all-time low in 2024. At the same time, nicotine pouch sales rose more than 50%, according to the World Health Organization.
Multiple studies have shown that smokeless nicotine products, like nicotine pouches, are more addictive than cigarettes. Because the pouches come in varying strengths, some contain more nicotine than cigarettes or vapes, which build nicotine tolerance quickly and speed up the addiction process, according to Cleveland Clinic.
Ella Rae Greene, Editor In Chief
