British American Tobacco (BAT) has announced plans to cut 5,500 jobs globally and outsource another 3,500 roles as the cigarette maker embarks on a major restructuring aimed at reducing costs and accelerating its shift towards artificial intelligence and smoke-free products.
The move will affect nearly one in every five positions across the company’s global workforce of about 47,000 employees, making it one of BAT’s biggest restructuring programmes in recent years. The company said the exercise is already underway and is expected to be completed before the end of the year.
BAT said the changes are part of a broader strategy to simplify its operations, improve efficiency and become a more technology-driven business. The company expects the restructuring to save about £600 million (approximately Sh103 billion) annually by 2028.
The maker of Lucky Strike, Dunhill, Kent and Rothmans cigarettes has been under growing pressure as demand for traditional tobacco products continues to decline across many markets. More smokers are switching to alternatives such as vaping devices, heated tobacco products and nicotine pouches, forcing tobacco companies to rethink their business models.
In response, BAT has invested heavily in next-generation products, including Vuse vapes, Velo nicotine pouches and glo heated tobacco devices. However, growth in these products has been slower than expected due to stricter regulations, delays in product approvals and the rapid growth of the illegal vape market.
The company said its largest market, the United States, has also become more challenging as persistent inflation and the high cost of living push many smokers towards lower-priced cigarette brands. BAT added that lengthy regulatory approval processes for vaping products have allowed illegal products, particularly those imported from China, to gain market share.
Chief Executive Tadeu Marroco said the restructuring is intended to strengthen the company’s long-term competitiveness.
“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,” he said.
BAT has confirmed that the United States will not be affected by the latest job cuts, but it has not disclosed which other countries or business units will bear the biggest impact.
Market analysts say the announcement reflects the difficult transition facing the global tobacco industry as cigarette sales continue to fall while newer nicotine products take longer than expected to generate strong returns.
“The tobacco industry has found the transition from cigarettes to next-generation products to be a slow one,” Dan Coatsworth, Head of Markets at AJ Bell, said.
BAT has been pursuing an aggressive transformation strategy over the past few years, focusing on automation, artificial intelligence and digital technologies to improve productivity while reducing operating costs. The latest workforce reduction is expected to support those efforts as the company reshapes its global operations.
The announcement is likely to attract attention in Kenya, where BAT has operated for decades through BAT Kenya Plc. British American Tobacco Plc owns a controlling 60 per cent stake in the Nairobi Securities Exchange-listed company, making it one of the country’s largest multinational manufacturers.
Although BAT has not indicated whether its Kenyan operations will be affected, BAT Kenya has previously implemented restructuring measures, including changes to its Nairobi manufacturing operations. The company has cited automation, increasing competition from illicit tobacco products, changing consumer habits and a difficult tax environment among the reasons for streamlining parts of its business.
The Kenyan subsidiary remains an important export hub for BAT in the East African region and has continued investing in operational efficiency as the tobacco industry evolves.
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