British American Tobacco plans to reduce its workforce by about 20%, as it pushes ahead with an AI-driven transformation program to cut costs and bolster profits amid regulatory challenges and delayed launches, the company stated today (June 29).
The tobacco giant said it would cut 5,500 jobs and move a further 3,500 roles to third-party firms, including Accenture, impacting a total of 9,000 employees.
The cost-saving programme is expected to add £600 million worth of annualised incremental savings by 2028, with £500 million already targeted by 2027.
BAT said that most of the role changes had now been confirmed with employees, with remaining consultations being carried out in compliance with local requirements.
"These changes affect many of our colleagues and we are focused on supporting them through this transition with care and respect," CEO Tadeu Marroco said in a statement.
He added that the move would make the company more agile, cost-disciplined and technology-enabled.
The Lucky Strike and Dunhill cigarette maker's sales and profit growth have been sluggish in recent years, falling short of or just reaching its own targets, disappointing some investors.
The company's main profit driver - traditional tobacco - is in terminal decline, with BAT predicting a global, industry-wide decline of 2.5% this year.
BAT is shifting its focus to smoking alternatives like its Vuse vapes and Velo nicotine pouches to drive growth, but it has faced problems and fallen behind key rival Philip Morris International.
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”.
There will be no cuts in its business in the US, where it operates under its subsidiary Reynolds American.