British American Tobacco (BAT) added 4.7 million smokeless consumers in 2025, taking its total to 34.1 million, as the tobacco giant accelerated its shift towards modern nicotine products despite continued pressure on vape sales.
The company said smokeless products – including vapour, heated tobacco and nicotine pouches – accounted for 18.2 per cent of group revenue in the year to 31 December, up 70 basis points year-on-year, with revenue from New Categories rising 7.0 per cent at constant currency to £3.6 billion.
Contribution from these next-generation products increased sharply, with New Categories delivering £442 million in category contribution, up 77.1 per cent, reflecting BAT’s focus on improving profitability as well as volume growth.
Chief executive Tadeu Marroco said the business was seeing encouraging progress, particularly in nicotine pouches.
He said: “Our New Categories revenue is accelerating, returning to double-digit growth in H2, driven by strong Velo growth in all regions… The recent improvement in Vuse performance is encouraging, although the vapour category continues to be impacted by illicit proliferation.”
Vapour sales decline amid illicit competition
BAT’s vape category, led by its Vuse brand, saw revenue fall 8.6 per cent at constant exchange rates, with volumes down 12.6 per cent, as illegal disposable vapes continued to disrupt regulated markets including the US, UK and parts of Europe.
BAT estimates unregulated devices make up about 70 per cent of US e-cigarette sales, hitting both its vape and traditional tobacco businesses. The company has two active cases at the US International Trade Commission, seeking to block imports of unregulated devices.
Marroco said a potential US move to block imports of some disposable vapes could cut the illegal market by as much as a third, though any impact is unlikely before 2027.
In Europe, vape revenue was also hit by regulatory and excise changes in markets such as the UK, Poland and France, alongside weak enforcement against illicit products in Canada.
Despite the decline, BAT said it maintained vape value share leadership in key markets and reported positive early results from its new premium Vuse Ultra device.
Nicotine pouches power smokeless growth
Nicotine pouches were the standout performer, with Modern Oral revenue rising 48 per cent at constant rates, driven by strong demand for the Velo brand and the national rollout of Velo Plus in the US.
The pouch brand has rapidly gained share and reached the number-two position in both volume and value in the US, with triple-digit revenue growth in the market.
Group performance and outlook
Overall group revenue fell 1.0 per cent on a reported basis to £25.6 billion due to currency headwinds, but rose 2.1 per cent at constant exchange rates, while adjusted profit from operations increased 2.3 per cent.
BAT said it expects low double-digit growth in New Categories revenue in 2026 and remains committed to expanding its smokeless portfolio as part of its long-term transformation.
The company added that continued investment in innovation, including launches such as Vuse Ultra and Velo Shift, would support further growth as it targets increasing returns from reduced-risk products.