British American Tobacco (BAT) will cut about a fifth of its 47,000-strong workforce this year, as the cigarette-maker looks for ways to push down costs and become more “technology enabled”.
BAT, which is one of the biggest tobacco groups in the world, has announced it will cut 5,500 jobs by the end of the year and outsource a further 3,500, affecting a total of 9,000 employees.
The FTSE 100 company is grappling with falling demand for traditional cigarettes and pressure to invest in nicotine alternatives.
The company said the cuts were part of a “transformation programme” expected to create £600m of annual cost savings by the end of 2028.
The BAT chief executive, Tadeu Marroco, said the company was “building a future-ready organisation” that was “more agile, cost disciplined and technology enabled”.
He added: “These changes affect many of our colleagues, and we are focused on supporting them through this transition with care and respect, as we position the business for the future.”
There will be no cuts in its business in the US, where it operates under its subsidiary Reynolds American.
Last year, BAT partnered with the technology consultancy Accenture to outsource some of its work, which Marroco said at the time would give the tobacco company access to its “advanced AI solutions”. Some jobs in the UK, Poland, Romania, Costa Rica, Mexico, Singapore and Malaysia have been absorbed by Accenture since the deal, BAT said.
In February, the BAT interim finance chief, Javed Iqbal, told the Financial Times that plans to simplify the company would make it “more digital and AI-focused”.
BAT, which makes Dunhill and Peter Stuyvesant cigarettes, has also been shutting down some of its traditional cigarette manufacturing. In January, it announced it would close its eighth largest factory, located in South Africa, because of competition from illicit trade.
The group has predicted that global cigarette industry volumes will fall by about 2.5% this year.
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The company, which is listed and headquartered in London, has been investing heavily in smoke-free products such as Vuse vapes and Velo nicotine pouches.
It told investors this month that revenue growth in this “new categories” part of the business was accelerating, and mid-teen percentage growth was expected this year.
Shares in BAT fell by about 1.4% in early trading on Monday, although they were still up by about 11.8% in the year to date. Shares in its rival Imperial Brands also fell by 1% in early trading on Monday.
