British American Tobacco speeds up its transformation with thousands of job cuts

The British tobacco group British American Tobacco (BAT), owner of the Lucky Strike, Dunhill and Rothmans brands among others, has announced a major restructuring plan worldwide. The company expects to cut around 5,500 jobs, on top of which several thousand positions are to be transferred to outside partners.

The decision is part of a strategic programme named “Fit2Win”, designed to adapt the group to the deep changes the tobacco industry is currently going through.

A tobacco sector in the middle of a shift

For several years, the major cigarette manufacturers have faced a gradual fall in sales of conventional cigarettes in many markets. Changing consumption habits, ever stricter public health policies and the development of nicotine alternatives are pushing manufacturers to review their business model.

British American Tobacco therefore expects global volumes of conventional cigarettes to keep falling over the coming years. Faced with that trend, the group wants to speed up its repositioning towards products it presents as lower risk, in particular electronic cigarettes, nicotine pouches and heated tobacco products.

5,500 job cuts announced

In detail, BAT plans to cut around 5,500 jobs worldwide. At the same time, close to 3,500 further positions are expected to be transferred to specialist companies under outsourcing agreements.

In total, therefore, nearly 9,000 jobs could be affected by this wide-ranging reorganisation. The group has not said which countries or industrial sites would be most concerned.

British American Tobacco states that the plan will not apply to the United States, which remains its main market.

Substantial savings expected

Through this restructuring, BAT hopes to generate around 600 million pounds of additional annual savings by 2028. Those savings are intended to allow the group to invest more in its smoke-free activities while improving its profitability.

The company also wants to speed up the automation of certain functions and make greater use of new technologies across its various divisions.

A strategy begun several years ago

This transformation plan does not come as a complete surprise. For several years now, BAT has been increasing its investments in vaping and in new nicotine-based products.

The manufacturer sells the Vuse electronic cigarette, which has become one of the sector’s reference products in several countries, as well as Velo nicotine pouches. These segments are now a priority area of development for the company.

According to several analysts, the structural decline of the conventional cigarette market makes this kind of restructuring inevitable among the sector’s large groups.

Concerns about employment

While British American Tobacco says it intends to support its staff through the transition, the announcement has caused considerable concern. Several regions that have already experienced closures of tobacco industrial sites fear further local economic consequences.

The closure of the Boncourt factory in Switzerland in 2023 left a particular mark, with more than 200 jobs lost after over two centuries of industrial activity.

The coming months will make clearer how these job cuts are distributed geographically, as well as the support measures put in place for the employees concerned.

A strong signal for the future of the tobacco market

This latest restructuring illustrates once again the deep transformation the global tobacco industry is currently going through. Between falling sales of conventional cigarettes, tighter regulation and the rise of nicotine alternatives, the large groups are now seeking to reinvent their business model.

For British American Tobacco, the reorganisation looks like a strategic step intended to prepare for the future in an increasingly competitive and regulated environment.