September 2026: BAT Announces Horizon 2030 Strategy and Reaffirms 2026 Targets
Ahead of its 2026 Capital Markets Day in Winston-Salem, North Carolina – the historic base of its Reynolds American business for over 150 years – British American Tobacco (BAT) announced its long-term Horizon 2030 corporate strategy. The company underlined its aim to deliver sustainable shareholder value in a growing global nicotine market by leveraging its multi-category product portfolio, global distribution reach, digital capabilities, and scientific innovation ecosystem.
Central to the Horizon 2030 roadmap is the accelerated expansion and profitability of BAT’s New Category segment, which includes non-combustible products such as vapes, heated tobacco, and nicotine pouches. The group projects New Category revenue to grow at a mid-teens compound rate through 2030, while targeting a contribution margin of at least 30% by the decade’s end. Management stated that this margin expansion will be driven by a quality growth approach centered on product premiumization, an optimized sales mix, operational scale, and targeted resource allocation.
Alongside its long-term ambitions, BAT reaffirmed its financial guidance for full-year 2026. At constant currency rates, the company remains on track to deliver revenue growth towards the lower end of its 3% to 5% target range, with adjusted operating profit growth also expected towards the lower end of 4% to 6%. Adjusted diluted earnings per share growth is projected towards the middle of its 5% to 8% range. BAT expects to bring its net debt within its target leverage range of 2.0 to 2.5 times by year-end while continuing cash returns to shareholders. Extrapolating current spot rates, the company expects a translational foreign exchange headwind of approximately 2.0% to 2.5% on full-year adjusted diluted earnings per share growth, representing a slight revision from its previous guidance of roughly 2% to 3%.
August 2026: BAT Accelerates Digital Transformation with Expanded Multi-Year ITC Infotech Strategic Partnership
British American Tobacco (BAT) has announced an expanded multi-year strategic technology agreement with ITC Infotech to accelerate the transformation of its global Information and Digital Technology operations. Building on a long-standing relationship, the expanded partnership will modernize BAT’s technology landscape, power AI-enabled innovation, strengthen internal technical capabilities, and drive operational efficiencies across key regional hubs.
Under the multi-year mandate, ITC Infotech will deepen its engagement across critical markets, delivering expanded end-to-end technology services across Poland, Romania, and India. The collaboration will also scale operational capabilities at the newly launched BAT Future Capabilities Centre in India, while reinforcing support for established technology hubs in Malaysia and Mexico. This next-generation operating model focuses on streamlining managed services, elevating service delivery standards, and integrating AI-driven tools across BAT’s global enterprise systems.
The partnership is designed to enhance operational resilience, innovation, and agility across BAT’s technology landscape. Leveraging ITC Infotech’s technical capabilities and domain expertise, the initiative supports BAT in simplifying managed services, optimizing its global IT structure, and executing the next phase of its digital transformation strategy.
Overall, the expanded alliance forms a pivotal component of BAT’s broader enterprise framework to establish an agile and future-ready technology ecosystem. By consolidating service frameworks and aligning European capabilities with global tech hubs, BAT aims to achieve faster response times, unified architecture, and robust risk management while deploying automation and intelligent decision-making tools across its global footprint.
August 2026: British American Tobacco Announces Management Board Changes
Luciano Comin will step down from his role as Chief Marketing Officer and from the Management Board on February 28, 2027, concluding a 34-year career with British American Tobacco (BAT). When he leaves, Luciano will have been a member of the Management Board for eight years, including three as Chief Marketing Officer.
Pascale Meulemeester will succeed Luciano as Chief Marketing Officer. Pascale is currently Regional Director, Asia Pacific, Middle East and Africa (APMEA). Pascale will be appointed as Chief Marketing Officer Designate with effect from January 1, 2027 and will assume the role of Chief Marketing Officer on March 1, 2027, continuing as a member of the Management Board throughout.
Celina Li will join BAT with effect from September 1, 2026 as Regional Director Designate, APMEA, and will become Regional Director, APMEA and a member of the Management Board with effect from January 1, 2027. Celina is currently Chief Commercial Officer and General Manager, International & Ingredients at Ocean Spray Cranberries, Inc., a global agricultural cooperative where she is a member of the Executive Leadership Team. Prior to joining Ocean Spray in 2021, Celina spent five years at The Coca-Cola Company where she held several senior roles, including Vice President and General Manager, Water and Vice President, Strategy. She previously held a number of roles at Anheuser-Busch InBev and The Procter & Gamble Company. She began her career with Bain & Company.
June 2026: BAT Restructuring to Impact 9,000 Roles in £600 Million Cost-Cutting Drive
British American Tobacco (BAT) is eliminating or outsourcing approximately 9,000 roles worldwide as part of its “Fit2Win” restructuring program. Launched in 2025, the efficiency initiative aims to generate £600 million in annual cost savings by the end of 2028. The reorganization will eliminate roughly 5,500 jobs globally, while an additional 3,500 roles will transfer to external strategic partners. BAT confirmed that its U.S. operations are excluded from the scope of these changes. Employee consultations have largely concluded, with remaining reviews progressing according to local labor regulations.
BAT stated that the restructuring is intended to create a simpler corporate structure capable of competing in a changing market environment. A core element of the restructuring involves transferring operational and digital functions to third-party technology and business services firms:
– Accenture: Under an agreement initiated in July 2025, functions within BAT’s Global Service Hubs (Costa Rica, Mexico, Poland, Romania, and Malaysia) and Supply Network Operations (UK and Singapore) have shifted to Accenture.
– Systems Ltd.: Select operational roles in Pakistan have transitioned to this firm.
– ITC Infotech (ITCI): Information, Digital, and Technology (IDT) positions in Poland and Romania are being transferred to ITCI. The two entities are also collaborating on a new Future Capabilities Centre in India to support existing hubs in Malaysia and Mexico.
Over the past 18 to 24 months, BAT has consolidated its global manufacturing footprint. This consolidation includes the previously announced shutdown of its Heidelberg factory in South Africa, which the company attributed to high volumes of illicit tobacco products dominating that regional market.
April 2026: BAT Appoints Chief Financial Officer
Dragos Constantinescu will join BAT as Chief Financial Officer (CFO) and Executive Director with effect from September 1, 2026. Dragos is currently serving as CEO of Asahi Europe & International and since joining Asahi in 2019, he has also held a number of other senior leadership roles across Europe including Managing Director, Czech, Slovakia, Germany & Austria and Managing Director, Romania & Hungary. Before Asahi, Dragos spent 16 years at BAT, where he held senior finance and general management roles, including as General Manager, Central Europe North and Finance Director and General Manager, BAT Poland.
March 2026: British American Tobacco Concludes 30-Year Cuba Presence with Brascuba Divestment
British American Tobacco (BAT) has officially concluded its nearly three-decade presence in Cuba following the sale of its 50% in joint venture Brascuba Cigarrillos S.A. According to disclosures filed with the U.S. Securities and Exchange Commission, the transaction was initially signed on December 19, 2025, and reached final completion in February 2026, officially removing the business from BAT’s consolidated financial balance sheet.
Under the agreed terms, BAT sold its equity stake to Tabagest S.A., a Cuban-registered entity tied to state tobacco monopoly Tabacuba. BAT’s 2025 annual reporting stipulates a purchase price of $25 million for the equity shares, along with an additional $35 million payable in euros for the assignment of outstanding trade receivables owed to BAT’s Brazilian subsidiary, Souza Cruz. Prior to the transaction, BAT recorded £231 million in asset impairment losses against Brascuba, reflecting a sharp decline in the unit’s operational value amid growing economic challenges on the island. With the closing of the deal, the multinational has surrendered all voting rights, executive board seats, and claims to future profits, noting that the exit carries no material impact on the group’s overall financial stance as capital allocation shifts toward higher-priority global markets.
First established in 1995, Brascuba was long highlighted by the Cuban government as a flagship foreign direct investment project outside the tourism sector. The joint venture handled distribution for the domestic brand Popular while manufacturing licensed cigarette versions of world-famous cigar brands – including Cohiba, H. Upmann, and Romeo y Julieta – for both domestic consumption and export to more than 20 countries. In 2016, the enterprise launched a major $120 million manufacturing complex in the Mariel Special Development Zone. However, the facility suffered severe structural damage in November 2024 from Hurricane Rafael, bringing production to a complete standstill and causing prolonged repairs that heavily disrupted supply.
The divestment comes amid acute strain across Cuba’s domestic tobacco sector. Local manufacturers fulfilled only 74% of their planned production targets in 2024, deepening widespread cigarette shortages and driving informal market prices to record highs. Beyond physical and operational disruptions, foreign enterprise on the island has faced mounting structural hurdles, including frozen foreign-currency accounts and severe restrictions on repatriating profits. BAT’s departure fits into a broader trend of international retrenchment, including Imperial Brands’ exit from Habanos S.A.’s international distribution arm. While Tabacuba will maintain operations at the Mariel facility under full state control, BAT’s withdrawal marks the end of major multinational participation in Cuba’s domestic cigarette industry.
March 2026: Reynolds American Plans $3.2 Billion U.S. Investment by 2030
British American Tobacco (BAT)’s U.S. subsidiary, Reynolds American has announced plans to invest more than $3.2 billion in its U.S. operations by 2030, aimed at expanding manufacturing capacity, strengthening supply chains, and supporting innovation across its nicotine product portfolio. The investment program, which began in 2024, is expected to support more than 2,000 direct and indirect jobs across the company’s operations and supply network.
The initiative is part of a broader strategy to drive long-term growth and accelerate the shift toward smokeless nicotine products. Investment priorities include modernizing and expanding U.S. manufacturing, scaling innovation and production, strengthening domestic supply chains, and enhancing workforce capabilities. More than $200 million has already been invested in U.S. manufacturing over the past two years.
Key roles in the program will be played by the company’s research and manufacturing hub in Winston-Salem, North Carolina, and its operations in Clarksville, Tennessee, which support development and production across multiple nicotine categories. Reynolds American invests about $100 million annually in research and development, with most of this focused on innovative smoke-free products. The company currently employs over 4,300 people in the United States, spanning manufacturing, engineering, science, and corporate functions, and in 2025 it was the largest purchaser of U.S. tobacco leaf from domestic farmers.
February 2026: British American Tobacco Extends Luc Jobin’s Tenure as Chairman Through 2028
British American Tobacco (BAT) announced that the Board has decided to extend Luc Jobin’s tenure as Chairman for up to two years, following a comprehensive Chairman succession process. His tenure will continue until the Company’s Annual General Meeting (AGM) in April 2028. The search for a new chairman will continue during this period, with the aim of making an appointment before the end of the extension. Luc will continue to stand for annual re-election at the AGM.
Luc joined the Board in July 2017 and became Chair in April 2021. By July 2026, he will have served nine years on the Board, including five as Chairman. Extending his tenure beyond July 2026 would exceed the UK Corporate Governance Code’s recommended nine-year limit. Nevertheless, the Board believes that extending Luc’s tenure is in the best interests of BAT at this time, providing stability during this key phase of the Company’s transformation and giving the Nominations Committee sufficient flexibility to appoint the right successor.
Holly Keller Koeppel, who has served on the Board since July 2017, will step down at the conclusion of the 2026 AGM. Karen Guerra will be appointed as Senior Independent Director, subject to re-election.
February 2026: Capital Group reduces its BAT stake
British American Tobacco (BAT)’s largest shareholder, Los Angeles-based Capital Group – with over $3 trillion Assets under Management (AuM) – continues to progressively reduce its BAT stake after a year-long purchase streak (128 million shares purchased in total) that upped its stake from 13% to 19%. Disposing c.27 million shares, Capital lowered its BAT stake from 19% to 17.9%.
| Latest | Latest | Previous | Previous | Change | Change | |
| Date | Mn shares | Stake | Mn shares | Stake | Mn shares | Stake |
| 2/12/24 | 310.4 | 14.04% | 289.3 | 13.04% | +21.1 | +1.00pp |
| 15/1/25 | 332.9 | 15.08% | 310.4 | 14.04% | +22.5 | +1.04pp |
| 7/2/25 | 355.3 | 16.10% | 332.9 | 15.08% | +22.4 | +1.02pp |
| 6/3/25 | 375.1 | 17.02% | 355.3 | 16.10% | +19.8 | +0.92pp |
| 6/6/25 | 397.0 | 18.07% | 375.1 | 17.02% | +21.9 | +1.05pp |
| 10/7/25 | 417.3 | 19.01% | 397.0 | 18.07% | +20.3 | +0.94pp |
| 22/1/25 | 410.9 | 18.87% | 417.3 | 19.01% | -6.4 | -0.14pp |
| 6/2/26 | 390.4 | 17.94% | 410.9 | 18.87% | -20.5 | -0.93pp |
December 2025: Delaware Supreme Court Upholds $251 Million Indemnification Ruling in British American Tobacco – Imperial Brands Dispute
The dispute between Imperial Brands (ITG Brands) and British American Tobacco (Reynolds American) arises from ITG’s 2015 acquisition of four cigarette brands from Reynolds – Winston, Salem, Kool and Maverick – which were divested as part of regulatory approval for Reynolds’ merger with Lorillard. As part of longstanding tobacco settlement obligations, Reynolds makes annual payments to the State of Florida under the settlement agreement. Although ITG did not join the settlement after the acquisition, Florida’s courts held that Reynolds remained liable for the payments related to sales of the acquired brands, leaving Reynolds to pay on behalf of products it no longer owned. Reynolds sought indemnification from ITG for those payments under the asset purchase agreement between the companies.
In March 2025, the Delaware Court of Chancery ruled that ITG must reimburse Reynolds for the more than $251 million it paid to Florida on account of the acquired brands, concluding that the purchase agreement required ITG to assume the liability and that the payments were not excluded from indemnification. ITG’s argument that its liabilities should be reduced to reflect cost savings Reynolds enjoyed because ITG did not join the Florida settlement was rejected.
ITG appealed the Chancery Court’s decision. On December 15, 2025, the Delaware Supreme Court, sitting en banc, affirmed the lower court’s judgment and denied ITG’s bid to reverse the award. The Supreme Court held that the amounts Reynolds paid to Florida on behalf of the ITG-owned brands were not excluded from the indemnification obligations under the acquisition agreement, leaving ITG responsible for the full reimbursement. The ruling ends a nearly decade-long litigation over contract interpretation in the context of tobacco industry settlement obligations, with significant financial and contractual implications for how successor liabilities are allocated in divestitures of regulated product portfolios.
December 2025: British American Tobacco continues to optimize its global footprint
British American Tobacco (BAT) announced the decision to exit Mozambique and the consideration to exit Cuba as well. As part of the Quality Growth strategy (i.e. reallocation of resources to markets/segments where returns can be maximised), BAT has been reducing its global footprint in recent years; BAT now operates in 140 markets as opposed to c.170 markets a few years ago.
BAT was the leading cigarette manufacturer and distributor in Mozambique with more than 90% of the market at some point. The Mozambique exit is speculated to be associated with neighbouring, South Africa – which can be seen as both a threat to exit South Africa at a later stage and a preventive action to cut the flow of contraband cigarettes from Mozambique to South Africa.
In the key South African market, BAT has experienced 40% volume decline since 2020 due to the explosive growth of illicit cigarettes in the market. As a consequence of the scale loss, BAT reduced its overall workforce in South Africa by more than 30% since 2020. In FY23, BAT recognized £291 million goodwill impairment due to the continued negative effect of illicit trade.
According to a study commissioned by BAT, 69% of retailers sell cigarettes for less than R20 (US$1.2) per pack and almost 80% sell below the R26.22 (US$1.6) minimum collectible tax – triple the number reported three years ago. It is estimated that South African Government losses R28 billion (US$1.7 billion) a year in taxes as a result of illicit cigarette trade. BAT calls for the introduction of a minimum retail price of R37 (US$2.2) per pack – an economically viable level below which it should be illegal to sell a pack of 20 cigarettes.
BAT’s presence in South Africa dates back to 1904 when the United Tobacco Company was established. However, beyond a long presence in Africa’s most developed market, BAT’s history in South Africa is shaped with its relationship with the country’s richest family. In 1999, Rupert-family controlled Rothmans International (owned two thirds by Richemont, one third by Rembrandt) merged with BAT and Rupert-family controlled entities (Richemont and Rembrandt) acquired a combined 35% stake in the enlarged BAT Group. In 2008, most of this stake was distributed to the shareholders and a small amount was transferred to the Luxembourg-based Reinet Investments. As part of the distribution, BAT shares were listed on the Johannesburg Stock Exchange (JSE). Rupert-family controlled Reinet Investments divested the final tranche of its BAT stake in 2025, ending the family’s almost eight decades of presence in the tobacco industry. Nevertheless, BAT still has a secondary listing on the JSE alongside its NYSE listing.
December 2025: British American Tobacco sell about 60% of its ITC Hotels stake
British American Tobacco (BAT) completed the block trade of 187,500,000 ordinary shares in ITC Hotels to investors by way of an accelerated bookbuild process (“Block Trade”). The Block Trade Shares represent 9% of ITC Hotels’ issued ordinary share capital. Following completion of the Block Trade, BAT retains a c. 6.3% holding in ITC Hotels. Net proceeds from the Block Trade amount to ₹38.2 billion (c. £315 mn at current exchange rates). The proceeds will be used to progress to within the target 2-2.5x adjusted net debt/adjusted EBITDA leverage corridor (adjusted for Canada) by the end of 2026.
Established in 1975, ITC Hotels manage over 140 hotels across 90+ destinations in the Indian subcontinent. Following a demerger from ITC Limited, ITC Hotels has been trading as a publicly listed entity since January 2025. As a result of its shareholding in ITC at the time of the demerger, BAT received a c.15.3% stake in ITC Hotels. BAT repeatedly stated that a direct stake in ITC Hotels is not a strategic holding for the Company.
December 2025: Total Voting Rights
British American Tobacco (BAT) announced that, as at November 28, 2025 (the last day of trading for the month), its issued share capital consisted of 2,181,845,074 ordinary shares and it held 132,988,352 shares in Treasury. The number of ordinary shares is 2.4 million (0.1%) less than a month ago and 29.1 million (1.3%) less than a year ago. The number of shares held in Treasury remains virtually unchanged around 133 million shares.
October 2025: British American Tobacco files for an issue of €1.2 billion hybrid capital securities
British American Tobacco (BAT) published a prospectus in relation to an issue of hybrid capital securities, a financial instrument which is subordinate to all senior creditors. This dual tranche issue comprises:
– a perpetual non-call 5.25 year capital security of €600 million with an initial coupon of 4.200% (the first call date: any business day following October 30, 2030 to January 30, 2031)
– a perpetual non-call 8.0 year capital security of €600 million with an initial coupon of 4.750% (the first call date: any business day following July 30, 2033 to October 30, 2033).
The Securities will be accounted as equity in accordance with IFRS standards. The Securities will receive an equity credit of 50% from Moody’s, Standard & Poor’s and Fitch. The net proceeds from the issuance will be used for general corporate purposes, including the repurchase of outstanding perpetual subordinated securities and the repayment of debt.
Downlad the Security Prospectus
October 2025: British American Tobacco postponed VUSE ONE launch in the U.S.
British American Tobacco (BAT) put on hold the pilot launch of VUSE ONE disposable vapes in the U.S. Previously, BAT revealed its intention to launch VUSE ONE without U.S. FDA authorization. The move comes after BAT received warning letters from the U.S. FDA concerning the planned VUSE ONE launch without marketing authorization.
October 2025: Kenneth Dart reduces his BAT stake further
A major BAT shareholder, Cayman Islands-based Spring Mountain Investments (the investment vehicle of American billionaire Kenneth Dart) made eight BAT stake disposal announcements in April-May 2025 for a total of 115.2 million shares. Following a 4.5-month pause, Spring Mountain released three share disposal announcements in three weeks’ time – selling 54.1 million shares in total and reducing its BAT stake to 2.8%.
Since April 2025, Spring Mountain reduced the number of BAT shares it held by 73% from 230.7 million to 61.4 million and Spring Mountain’s stake in BAT declined from 10.47% to 2.81% (i.e. 7.66pp reduction in total).
| Latest | Latest | Previous | Previous | Change | Change | |
| Date | Mn shares | Stake | Mn shares | Stake | Mn shares | Stake |
| 11/4/25 | 220.1 | 10.00% | 230.7 | 10.47% | -10.6 | -0.47pp |
| 22/4/25 | 202.9 | 9.22% | 220.1 | 10.00% | -17.2 | -0.78pp |
| 23/4/25 | 195.9 | 8.90% | 202.9 | 9.22% | -7.0 | -0.32pp |
| 28/4/25 | 187.1 | 8.50% | 195.9 | 8.90% | -8.8 | -0.40pp |
| 6/5/25 | 174.5 | 7.93% | 187.1 | 8.50% | -12.6 | -0.57pp |
| 9/5/25 | 160.3 | 7.29% | 174.5 | 7.93% | -14.2 | -0.64pp |
| 12/5/25 | 153.4 | 6.97% | 160.3 | 7.29% | -6.9 | -0.32pp |
| 19/5/25 | 115.5 | 5.25% | 153.4 | 6.97% | -37.9 | -1.72pp |
| 30/9/25 | 109.0 | 4.98% | 115.5 | 5.25% | -6.5 | -0.27pp |
| 13/10/25 | 86.4 | 3.95% | 109.0 | 4.98% | -22.6 | -1.03pp |
| 17/10/25 | 61.4 | 2.81% | 86.4 | 3.95% | -25.0 | -1.14pp |
September 2025: Kenneth Dart re-started to sell down his BAT stake
A major BAT shareholder, Cayman Islands-based Spring Mountain Investments (the investment vehicle of American billionaire Kenneth Dart) made eight BAT stake disposal announcements in April-May 2025 for a total of 115.2 million shares. Following a 4.5-month pause, Spring Mountain announced another 6.5 million share disposal, reducing its stake in BAT below the 5% threshold.
Since April 2025, Spring Mountain reduced the number of BAT shares it held by 53% from 230.7 million to 109 million and Spring Mountain’s stake in BAT declined from 10.47% to 4.98% (i.e. 5.5pp reduction in total).
As of September 30, 2025 (month-end), BAT’s issued share capital consists of 2,187,934,206 ordinary shares of 25p each and BAT holds 132,998,647 shares in Treasury (i.e. 6.1% of the issued share capital). Issued capital is 2.56 million shares less than a month ago while the number of shares held in Treasury is virtually unchanged.
September 2025: Major BAT shareholders
On September 3, Standard Bank Group announced a 0.2% stake in BAT, holding 4.65 million BAT shares. On August 28, Standard Bank had announced a 6.1% stake in BAT, holding 133 million shares. It seems that Standard Bank has reduced its stake by 128 million shares in a week. BAT shares were down ~3% in this period.
September 2025: Total Voting Rights
As of August 29, 2025 (month-end), BAT’s issued share capital consists of 2,190,492,051 ordinary shares of 25p each and BAT holds 132,999,412 shares in Treasury (i.e. 6.1% of the issued share capital). Issued capital is 2.26 million shares less than a month ago while the number of shares held in Treasury is virtually unchanged.
August 2025: Major BAT shareholders
Standard Bank Group, the largest bank in Africa based in Johannesburg, South Africa, announced a 6.1% stake in BAT. Standard Bank holds 133 million BAT shares. In January 2025, Standard Bank announced a 3.35% stake in BAT – implying a major stake build-up over the past 7 months.
As of July 31 2025, BAT’s issued share capital consists of 2,192,753,745 ordinary shares of 25p each and BAT holds 133,003,645 shares in Treasury (i.e. 6.1% of the issued share capital). BAT’s policy is to maintain its number of treasury shares below 10% of total issued share capital; thereby, shares repurchased as part of the Share Buy-back Program are subject to cancellation.
August 2025: Soraya Benchikh steps down from her role as the BAT Chief Financial Officer
British American Tobacco (BAT) announced that Soraya Benchikh stepped down from her role as Chief Financial Officer (CFO) and from the Board of Directors effective immidiately. Soraya will remain available to support the transition until December 31, 2025. Soraya had worked for BAT for about 20 years before re-joining as CFO in May 2024. She served as CFO only for only 16 months.
A recruitment process to identify a permanent successor to the role of CFO is being launched. Javed Iqbal, who is currently Director, Digital and Information, will take on the role of interim CFO. Javed previously acted as the Interim Finance Director from May 2023 until April 2024.
August 2025: British American Tobacco is test marketing VUSE ONE disposable vapes in the U.S. and plans a larger scale pilot in South Carolina, Florida and Georgia later this year
British American Tobacco (BAT) started to test-market the disposable vape products acquired from Charlie’s Holdings (formerly known as PACHA vapes) under the VUSE ONE brand name in the U.S. to assess the consumer appeal. As Charlie’s Holdings had filed PMTAs (accepted by the U.S. FDA) for these products, according to BAT, they can be legally marketed in the U.S. while waiting for the PMTA review outcome. BAT launched VELO PLUS nicotine pouches in the U.S. in late-2024 on the same basis and it has never been challenged by the U.S. FDA over this move.
VUSE ONE disposable vapes are prefilled with 12mL e-liquid of 5% (50mg/mL) nicotine strength. VUSE ONE features mesh coil heating element and comes in 5 flavors: Berry Melon, Raspberry Chill, Strawberry Kiwi, Tropical Chill and Watermelon Chill.
BAT stated that they will initiate a larger scale pilot of VUSE ONE in the U.S. in late-September or early-October 2025; new devices will initially be available in South Carolina, Florida and Georgia1. Although BAT has no plans to commercialize VUSE ONE vapes nationwide in the U.S. for the time being, they seem to get ready to quickly fill the vacuum created by the shortage of popular illicit disposable vapes as the federal- and state-level enforcement efforts intensify. In July 2025, U.S. Senate directed U.S. FDA to allocate $200 million from its FY26 budget to fight illicit vapes. Consequently, we expect intensification in the arrival inspection, seizure, confiscation and destruction of unauthorized vape products at ports of entry in 2026.
August 2025: British American Tobacco acquires an additional PACHA synthetic vape product
British American Tobacco (BAT)’s R. J. Reynolds Vapor Company amended the Asset Purchase Agreement with Charlie’s Holdings [for the second time] to purchase an additional PACHA synthetic [disposable] vape product and related assets that are covered by a premarket tobacco application (“PMTA”) first submitted in 2022, bringing the total purchased to sixteen products. The purchase price for the additional assets is $1 million. In April 2025, BAT acquired twelve PACHA synthetic vape products from Charlie’s Holdings. The purchase price was $5.0 million paid at closing, plus a contingent one-time payment of up to $4.2 million based on the sales volume during the first year of commercialization. Subsequently, in June 2025, BAT acquired three additional PACHA synthetic vape products for $1.5 million. Further details are availble below.
July 2025: British American Tobacco (BAT) partners with Accenture
British American Tobacco (BAT) and Accenture formed a global strategic partnership to transform BAT’s business operations functions. As part of the strategic partnership, BAT will transform its Global Business Solutions function and Supply Network Operations to simplify processes, improve speed to market, enhance compliance agility and create a foundation for future growth. The agreement will also provide BAT with access to Accenture’s comprehensive technological capabilities – including analytics and Agentic AI solutions – as well as its global learning capabilities, helping upskill BAT employees across the globe.
Ahead of the partnership announcement, Systems Limited, one of Pakistan’s largest software firms, acquired British American Tobacco SAA Services Limited – which provides IT-led shared and digital business services to BAT affiliates. Their service catalogue includes consumer & customer services through Omni-channel contact centre, marketing operations, HR operations, finance operations, procurement and supply chain related services. In parallel, Systems Limited signed a multi-year Master Services Agreement with Accenture for the provision of AI-powered global shared services. These services will be delivered through British American Tobacco SAA Services Limited, where Systems Limited will act as a subcontractor. With this move, BAT is probably transforming from in-house shared services to outsourced service provision. Moreover, through deployment of AI-powered solutions in outsourced services, BAT could reduce service provision costs and achieve a major productivity improvement over time.
July 2025: Capital Group ups its BAT stake
British American Tobacco (BAT)’s largest shareholder, Los Angeles-based Capital Group – with over $2.8 trillion Assets under Management (AuM) – continues to progressively build up its BAT stake. After purchasing an additional 20.25 million BAT shares since the June 2025 disclosure (within a month), Capital Group now holds 417.3 million ordinary BAT shares (i.e. 333.8 million ordinary shares plus 83.5 million depository receipts, worth $21.2 billion), corresponding to a 19.01% stake. Capital Group announced a 14% stake in December 2024, 15.1% stake in January 2025, 16.1% stake in February 2025, 17% in March 2025 and 18.1% in June 2025.
| Latest | Latest | Previous | Previous | Change | Change | |
| Date | Mn shares | Stake | Mn shares | Stake | Mn shares | Stake |
| 2/12/24 | 310.4 | 14.04% | 289.3 | 13.04% | +21.1 | +1.00pp |
| 15/1/25 | 332.9 | 15.08% | 310.4 | 14.04% | +22.5 | +1.04pp |
| 7/2/25 | 355.3 | 16.10% | 332.9 | 15.08% | +22.4 | +1.02pp |
| 6/3/25 | 375.1 | 17.02% | 355.3 | 16.10% | +19.8 | +0.92pp |
| 6/6/25 | 397.0 | 18.07% | 375.1 | 17.02% | +21.9 | +1.05pp |
| 10/7/25 | 417.3 | 19.01% | 397.0 | 18.07% | +20.3 | +0.94pp |
July 2025: The relation between BAT and ITC seems to be improving
British American Tobacco (BAT) and ITC have a long bitter-sweet relation: The BAT – ITC Saga. BAT’s ambitions to control ITC were repeatedly blocked in the past by the ITC leadership, who feared such a move would derail ITC’s diversification strategy. However, more recently, there is a marked shift toward closer collaboration between ITC and its largest shareholder, BAT, driven by mutual benefits in the global tobacco trade and a shared interest in India’s growing consumer market. Strengthening commercial ties are particularly visible in the tobacco leaf business. ITC’s raw tobacco sales to BAT surged by 35%, increasing from ₹1,070 crore in FY2023-24 to ₹1,445 crore in FY2024-25. At the same time, advances received by ITC from BAT nearly doubled, rising from ₹881 crore to ₹1,690 crore. These advances could represent prepayments or financial support related to tobacco procurement although they are not fully detailed in ITC’s annual report. The dramatic growth in sales and financing signals a renewed strategic partnership between the two companies, focused heavily on ITC’s tobacco operations.
To formalize and expand this collaboration, ITC is now seeking shareholder approval for significant related-party transactions with BAT. The proposed deals include exporting up to ₹2,320 crore worth of raw tobacco to BAT over the next two years (FY2025-27) and importing up to ₹30 crore worth of raw tobacco from BAT’s international sources. According to Indian regulatory norms, such transactions require disclosure and shareholder approval when the value exceeds ₹1,000 crore or 10% of the group’s annual revenue. The move underlines ITC’s growing importance within BAT’s global supply chain and may be part of a broader strategic shift in how BAT secures its raw materials.
Over the past 2 years, BAT reduced its stake in ITC from 29% to 23% after offloading a total of 6% stake in two rounds for around $3.5 billion in total. Despite these divestments, BAT remains ITC’s largest shareholder, ahead of Life Insurance Corporation of India (which owns 15.5% of ITC), and maintains significant control through two positions in the ITC Board. BAT often emphasizes that its ITC stake is a long-term “strategic investment”, rather than a short-term “financial investment” – citing the size of the Indian market, favorable demographics, and rising GDP per capita. BAT’s ultimate dream is to access the Indian market, home to 200 million smokeless users, with VELO nicotine pocuhes. It is yet to be seen whether the improved relations with ITC will lead to a strategic partnerhip that could reverse India’s prohibition on nicotine pouches and make VELO available to Indian consumers.
June 2025: British American Tobacco kicks off the search for a new chairman
British American Tobacco (BAT) is in the process of picking headhunters to help identify a successor to Luc Jobin, Chairman of the Board2. Jobin joined BAT’s Board as a Non-Executive Director on July 25, 2017 and was appointed as Chairman at the 2021 Annual General Meeting. The UK Corporate Governance Code recommends that the board chair not remain in post beyond nine years from their first appointment to the board. Moreover, non-executive directors are also not considered independent after serving for nine years. The Code’s recommendations are not mandatory, but are a benchmark for many UK companies. Thereby, Jobin could be voted out of the Board mid-2026. The search for his successor is not expected to conclude until late-2025 or early-2026.
June 2025: Capital Group ups its BAT stake
British American Tobacco (BAT)’s largest shareholder, Los Angeles-based Capital Group – with over $2.8 trillion Assets under Management (AuM) – continues to progressively build up its BAT stake and now holds 397,019,255 ordinary BAT shares, corresponding to a 18.07% stake. Capital Group announced a 13% stake in July 2024, 14% stake in December 2024, 15.1% stake in January 2025, 16.1% stake in February 2025 and 17% in March 2025.
June 2025: British American Tobacco presents at the 2025 dbAccess Global Consumer Conference
At the 2025 Deutsche Bank dbAccess Global Consumer Conference, British American Tobacco explained the major transformation it has gone through over the past two years under new leadership, focusing on sharpening execution and refreshing its strategic vision. The Company’s new three-pillar strategy – “Quality to Grow,” “Sustainable Future,” and “Dynamic Business” – is yielding results. BAT accelerated profitability in New Categories, reaching its target two years ahead of schedule, and reignited U.S. business growth after a three-year stall. Innovations like the launch of Vuse Ultra and a breakthrough heated tobacco platform (glo Hilo) are positioning BAT competitively for mid- and long-term growth. The company also improved financial flexibility through strong cash generation, resumed its buyback program, and revised its 2024 buyback guidance to £1.1 billion. Net debt is now back within the targeted leverage corridor of 2.0–2.5× adjusted EBITDA.
The U.S. market remains critical with 55%-57% of smokers being multi-category users. BAT implemented several commercial initiatives including pricing adjustments, expanded retail coverage (boosted by a 10% increase in salesforce), and enhanced loyalty & data programs. These efforts led to 60 basis points of share growth in the premium combustible segment (excluding deep discount brands). In the rapidly growing nicotine pouch segment, Velo is showing strong early traction. In vapor, BAT faces headwinds from illegal flavored disposables, which make up ~70% of the U.S. market, limiting BAT’s legal growth. Still, Vuse leads in trackable channels. BAT is cautiously optimistic that recent federal leadership changes and legislative action across 17 U.S. states (including Louisiana and Kentucky) will bring stricter enforcement against illegal products, potentially reviving the legal market.
Outside the U.S., BAT’s Vuse brand performs strongly in Europe, where rechargeable devices dominate. In France and the UK, BAT holds 57% and 35% market share in rechargeables, respectively. Vuse Ultra has been recently launched in Canada, targeting premium vapor users. Meanwhile, the new glo Hilo heated tobacco platform – featuring upgraded heating technology, connected devices, and higher satisfaction – is being trialed in Serbia with promising results (- with 50% more consumers switching from cigarettes and competition). A wider rollout is planned in key European markets in H2 2025 [and in Japan in June 2025], aiming to capture the premium segment of the heated tobacco category, which represents 80% of market value. In combustibles, while markets like Bangladesh have seen sharp volume drops (a projected 15 billion stick decline) due to aggressive tax increases, others like Brazil are showing resilience after cracking down on illicit trade.
In the oral nicotine category, Velo is the global market leader outside the U.S., with strong growth in both traditional (Nordics) and non-traditional markets (e.g., South Africa, Pakistan). BAT emphasized Velo’s advantages: affordability, no inhalation, and high consumer satisfaction. In newer markets, usage is still low (2.5 pouches/day vs. 9–10 in Nordic markets), indicating strong growth potential. BAT positions Velo as the closest product to nicotine replacement therapy in risk profile. These products are key to BAT’s harm reduction mission, which is central to its public messaging platform, “A Better Tomorrow.”
The company’s advocacy campaign, “A Better Tomorrow,” and its scientific initiative, Omni, aim to shift public health narratives by highlighting the lower risks of non-combustible nicotine products. Citing examples like Sweden (soon to be declared Europe’s first “smoke-free” country at 5.3% smoking incidence) and comparing it with Australia (where 75% of cigarette consumption is illicit due to restrictive policies), BAT argues for evidence-based regulation that encourages product transition rather than prohibition. BAT supports progressive regulation like retail licensing, age restrictions, and product standards to foster safer alternatives.
BAT highlighted that more than £17 billion is expected to be returned to shareholders between 2023 and end-2025, through progressive dividends and buybacks. The company aims to maintain a net leverage ratio of 2.0–2.5× and expects around £8 billion in free cash flow annually, with ~£5.5 billion allocated to dividends. Looking forward, BAT expects the benefits of 2024’s heavy investment year to become more visible in 2026. The company reiterated its mid-term guidance of 3–5% revenue growth and 4–6% operating profit growth. By 2030–2035, BAT aims to have 50% of revenue coming from non-combustibles. Its innovation ecosystem, broad product portfolio (including Vuse, Velo, glo), and global distribution (e.g., Velo launched in 100,000 U.S. outlets within months) are all considered strategic strengths. BAT also underlined “strategic” (not financial) stake in India’s ITC and the exploration in future-facing categories such as cannabis (via investment in Organigram) and wellness stimulation products. Nevertheless, nicotine remains the core focus for the foreseeable future.
June 2025: British American Tobacco acquires 3 additional PACHA synthetic vape products
British American Tobacco (BAT)’s R. J. Reynolds Vapor Company amended the Asset Purchase Agreement with Charlie’s Holdings to purchase three additional PACHA synthetic vape products and related assets that are covered by a premarket tobacco application (“PMTA”) first submitted in 2022, bringing the total purchased to fifteen products. The purchase price for the additional assets is $1.5 million. On April 16, 2025, BAT acquired twelve PACHA synthetic vape products from Charlie’s Holdings. The purchase price was $5.0 million paid at closing, plus a contingent one-time payment of up to $4.2 million based on the sales volume during the first year of commercialization. Further details are availble below.
BAT has no plans to commercialize PACHA synthetic vapes at-scale in the U.S. for the time being. However, they will test market the products to assess the consumer appeal. As Charlie’s Holdings had filed PMTAs (accepted by the U.S. FDA) for these products, they can be legally marketed in the U.S. while waiting for the PMTA review outcome.
June 2025: BAT is now the world’s second most valuable tobacco company
British American Tobacco (BAT) overtakes Altria to become the world’s second most valuable (publicly traded) tobacco company. Moreover, BAT’s market cap tops the $100 billion threshold for the first time since February 2022.
June 2025: Voting Rights & Capital
As of May 30, 2025, British American Tobacco’s issued share capital consists of 2,197,887,031 ordinary shares of 25p each with voting rights. The Company holds 133,005,360 shares (6.05% of the issued capital) in treasury.
May 2025: British American Tobacco reduced its ITC stake
British American Tobacco completed the block trade of 313,000,000 ordinary shares in ITC Limited to institutional investors by way of an accelerated bookbuild process. The Block Trade Shares represent c.2.5% of ITC’s issued ordinary share capital. Following the disposal, BAT now owns a 22.9% stake in ITC. Net proceeds from the Block Trade amount to ₹121 billion (£1.05 billion at current exchange rates). The net proceeds from the Block Trade will also be utilised to extend the BAT’s existing share buyback program announced by an additional £200 million, taking the total amount to be repurchased in 2025 to £1.1 billion. The extension will begin following completion of the latest tranche of the Program announced on 29 April 2025 and is expected to complete no later than 31 December 2025.
According to the market reports from the NSE, British American Tobacco (BAT) ordered a block trade of ITC shares at a floor price of ₹400 and the order was executed at a price of ₹417 a share. Accordingly, BAT’s gross proceeds amount to ₹130.5 billion and gross-to-net conversion ratio is realized as 92.7%. Details of the sellers and buyers involved in the block trades will be announced at market close (14:30 CET). At the time of writing, ITC shares are trading around ₹420 – down 1.5% excluding the dividend – after trading as low as ₹413 earlier in the session.
May 2025: British American Tobacco considers ITC stake sale
British American Tobacco (BAT) notes the recent market speculation, relating to a potential disposal of part of its shareholding in ITC Limited, and confirms that it is evaluating a possible disposal of a small part of BAT’s shareholding in ITC by means of an on-market trade.
BAT intends to sell 2.3% of the issued ordinary share capital in ITC to institutional investors by way of an accelerated bookbuild process (“Block Trade”), subject to customary closing conditions. The transaction will provide BAT with increased financial flexibility to deliver on its commitment to invest in transformation, deleveraging and sustainable shareholder returns. Proceeds will be used to progress to within the target 2-2.5x adjusted net debt/adjusted EBITDA leverage corridor (adjusted for Canada) by the end of 2026 and to increase the size of the 2025 share buyback program by £200 million to a total of £1.1 billion.
BAT’s initial investment in ITC dates back to the early 1900s. Following completion of the proposed Block Trade, BAT will remain a significant shareholder of ITC with a 23.1% stake. Further details of the value of net proceeds received will be shared once the transaction has completed. Other than the intended increase to the 2025 share buyback, the transaction has no impact on BAT’s 2025/26 guidance.
ITC closed the day down -2%, at ₹433.9, on NSE – which gives ITC a market capitalization of $63.6 billion. Accordingly, BAT’s 2.3% stake in ITC is worth $1.46 billion (£1.08 billion). Net proceeds from the ITC stake sale could be around £1.0 billion. Previously, in March 2024, BAT sold 436.85 million ITC shares (~3.5% of ITC’s issued share capital) to institutional investors by way of an accelerated book building process (“Block Trade”). Subsequently, using the proceeds from the ITC stake sale, BAT announced the initiation of a £1.6Bn share repurchase program (i.e. ~3% of share capital at the time). During the last ITC stake sale (March 2024), BAT underlined that owning a more than 25% stake in ITC is critical to keep the board seats and veto rights (thereby, the ability to exercise influence over ITC’s strategic direction). It seems like BAT has changed its stance since then.
May 2025: Kenneth Dart further reduces his stake in BAT
A major BAT shareholder, Cayman Islands-based Spring Mountain Investments (the investment vehicle of American billionaire Kenneth Dart) made eight BAT stake disposal announcements in the last six weeks: a total of 115.2 million shares were sold. Consequently, Spring Mountain reduced the number of BAT shares it held by half from 230.7 million to 115.5 million and Spring Mountain’s stake in BAT declined from 10.47% to 5.25% (i.e. 5.22pp reduction in total).
| Latest | Latest | Previous | Previous | Change | Change | |
| Date | Mn shares | Stake | Mn shares | Stake | Mn shares | Stake |
| 11/4/25 | 220.1 | 10.00% | 230.7 | 10.47% | -10.6 | -0.47pp |
| 22/4/25 | 202.9 | 9.22% | 220.1 | 10.00% | -17.2 | -0.78pp |
| 23/4/25 | 195.9 | 8.90% | 202.9 | 9.22% | -7.0 | -0.32pp |
| 28/4/25 | 187.1 | 8.50% | 195.9 | 8.90% | -8.8 | -0.40pp |
| 6/5/25 | 174.5 | 7.93% | 187.1 | 8.50% | -12.6 | -0.57pp |
| 9/5/25 | 160.3 | 7.29% | 174.5 | 7.93% | -14.2 | -0.64pp |
| 12/5/25 | 153.4 | 6.97% | 160.3 | 7.29% | -6.9 | -0.32pp |
| 19/5/25 | 115.5 | 5.25% | 153.4 | 6.97% | -37.9 | -1.72pp |
April 2025: British American Tobacco acquires 12 PACHA synthetic vape products
British American Tobacco (BAT)’s R. J. Reynolds Vapor Company acquired twelve PACHA synthetic vape products and related assets that are covered by the Pre-Market Tobacco Application (PMTA) submission made in 2022 from Charlie’s Holdings. The purchase price is $5.0 million paid at closing, plus a contingent one-time payment of up to $4.2 million based on the sales volume during the first year of commercialization. In March 2025, Charlie’s Holdings announced that the Center for Tobacco Products (CTP) accepted the PMTAs for eleven of Charlie’s PACHA Disposables.
We believe BAT acquired these products just because of the PMTA submission filed in 2022. This submission will allow BAT to legally market flavored disposable PACHA vapes in the U.S. and claw back volume from illegal flavored disposable vapes while waiting for the PMTA outcome (- which will be further delayed due to the staff shortages at the CTP).
March 2025: BAT’s strategic product development partner, BYD Electronics, will exit the e-cigarette business
Following a dialogue that started in 2023 between BYD and 20-strong institutional investors from the Asian Corporate Governance Association (ACGA), Chinese electric vehicle manufacturer BYD announced its decision to exit the e-cigarette business – in which it was involved through its BYD Electronics subsidary. The decision aligns with the European Securities and Markets Authority’s (ESMA) guidance, which could have required sustainability-focused funds to divest from BYD. BYD’s exit is seen as a proactive step to comply with environmental, social, and governance (ESG) standards, thereby maintaining its eligibility for inclusion in ESG-focused investment portfolios.
At the 2024 Capital Markets Day, British American Tobacco (BAT) presented BYD Electronics as a staregic partner – alongside with world’s largest e-cigarette manufacturer, Smoore – in delivering breakthrough innovation in Next Generation Products. At the time of the writing, it is not known how BYD’s decision will affect its strategic parnership with BAT.
March 2025: Major BAT shareholders
Los Angeles-based Capital Group – with $2.7 trillion Assets under Management (AuM) – continues to progressively build up its BAT stake and has now a 17% stake. BAT’s largest shareholder, Capital Group announced a 13% stake in July 2024, 14% stake in December 2024, 15.1% stake in January 2025 and 16.1% stake in February 2025. Moreover, Standard Bank Group, the largest bank in Africa based in Johannesburg, South Africa, announced a 3.35% stake in BAT in January 2025. Standard’s previous position was below the 3% disclosure threshold. BAT’s second largest shareholder, Cayman Islands-based Spring Mountain Investments (the investment vehicle of American billionaire Kenneth Dart) owns a 10.4% stake in BAT.
As of March 31 2025, BAT’s issued share capital consists of 2,202,643,918 ordinary shares of 25p each and BAT holds 133,015,299 shares in Treasury (i.e. 6% of the issued share capital). BAT’s policy is to maintain its number of treasury shares below 10% of total issued share capital; thereby, shares repurchased as part of the Share Buy-back Program are subject to cancellation.
February 2025: New Categories accounted for 13.3% of BAT’s revenue in 2024
New Categories include vapes, heated tobacco and nicotine pouches and are referred as Smoke-free Products (PMI), Next/New Generation Products (Imperial Brands), Reduced-Risk Products (Japan Tobacco) or new nicotine products (most regulators). In 2024, NGP business accounted for 13.3% of BAT’s revenue (up +1.0pp vs. 2023) and 38.8% of PMI’s revenue (up +2.4pp vs. 2023).
BAT bases its corporate targets & communications on Smokeless products, which also include the traditional oral tobacco category – mainly, moist smokeless tobacco (MST). BAT’s FY24 traditional oral tobacco revenue is £1.1 billion (4.2% of the Group revenue) – 97% of which is made in the US market (dipping tobacco, “dips”). Following the surge of nicotine pouches, this market is under significant volume pressure; BAT reported -8.9% volume and -6.1% revenue decline in the US traditional oral tobacco segment in FY24.
BAT aims to become a predominantly smokeless business by 2035 (i.e. revenue share of smokeless products to be more than 50%). Inclusion of a traditional business in transformation objectives is nothing more than a feel-good factor (i.e. upping BAT’s transformed revenue from 13.3% to 17.5%); yet, it makes the 2035 goal less meaningful (- difficult to call “dips” next/new generation*) and more difficult to achieve (- need to also overcome the decline of a traditional business). We believe BAT would be better-off setting a more realistic & meaningful target: for instance, 40% of revenue from NGPs by 2033 (i.e. x3 from today, reaching the level where PMI is today). Setting the right objective could be the very first step for BAT to restore the investor confidence on its ability to succeed in transfromation to NGPs.
* According to Altria’s product assessment data, BAT’s best-selling MST brand, Grizzly, contains 10 times more Acetaldehyde (an addictive carcinogen) and 25 times more Formaldehyde (a carcinogen) than on! PLUS nicotine pouches.
January 2025: Reinet exits BAT investment
The Luxembourg-based investment vehicle, Reinet Investments SCA, agreed to sell its entire shareholding in British American Tobacco (BAT) to institutional investors. Accordingly, 43.3million BAT shares are sold via JPMorgan Chase at a price of £28.2, generating gross proceeds of £1.22 billion. The sale price is at a 3.85% discount to BAT’s last closing price (£29.33) and the shares placed represents ~1.96% of BAT’s share capital.
Reinet was spun out of Swiss luxury goods company Richmond in 2020 as an investment vehicle. Reinet, which has a market capitalisation of €4.3 billion, intends using the proceeds from the share placement for its ongoing investment activity. Reinet was already in the process of reducing its BAT stake; on September 30, 2024, Reinet held 48.3 million BAT shares – corresponding to 24% of its net asset value. During November and December 2024, its indirect subsidiary, Reinet Jersey Holdings Ltd, sold 5 million BAT shares through a “dribble-out” process on the London Stock Exchange, realising gross proceeds of £148.5 million.
June 2024: Vuse Pro PMTA Submission
RJ Reynolds Vapor Company (RJRVC), an operating company of BAT’s US subsidiary Reynolds American, completed the Pre-Market Tobacco Product Application (PMTA) submission for the Vuse Pro age-gated device. RJRVC provided the US FDA with nearly 80,000 pages of scientific data for review as part of the submission, including 97 scientific studies.
Vuse Pro connects to a mobile application that verifies the user’s age through a third-party provider prior to unlocking the device for use. The technology also enables features such as auto-lock and proximity lock to further secure device access. Vuse Pro device works exclusively with Vuse Pro pods.
BAT underscores Vuse Pro platform as an innovative solution to limit the access to vapes to adult consumers (i.e. underage access prevention) while offering a unique vaping experience and flavors that appeal to adult smokers.
June 2024: BAT – CNTC Meeting
BAT’s CEO met Secretary of the Party Leadership Group & Director of the State Tobacco Monopoly Administration & General Manager of China National Tobacco Corporation (CNTC; all three roles combined) on June 12 in Beijing, according to the local Chinese media sources3.
High-level talks between the global tobacco companies and CNTC take place occasionally. This is a way for the global tobacco companies to keep their China hopes alive and for CNTC to get a privileged update on what is going on in the international tobacco market. These talks almost never result in a concrete next step.
Global tobacco companies have been trying to build and expand their presence in the 2.5 trillion-stick Chinese tobacco market for the last two decades. Likewise, CNTC aspires to be present in the international markets. Accordingly, any partnership with CNTC could only happen on “quid pro quo” basis (favor for favor): a global tobacco company is allowed to sell its products in China to the same amount that it sells CNTC products in the international markets. Recall that CNTC is not only the tobacco monopoly but also the market regulator in China – practically deciding on who can sell how much in the Chinese tobacco market.
June 2024: NGP Profitability
[DB Global Consumer Conference] BAT underlines a list of key factors that enabled the achievement of NGP break-even two years ahead of the initial plan (i.e. in FY23 instead of FY25):
– Scale: Increasing scale in NGPs translates into lower cost of goods sold – thanks to the factors such as manufacturing automation and improved negotiating power against the suppliers. Moreover, footprint optimization drives the costs down.
– Strengthening brands: Leading to improved negotiating power against the trade partners and better management of trade margins – which are particularly elevated in the e-vapor category (note: as the category was initially established by small entrepreneurs with no/limited negotiating power). Progress is made in terms of moving away from a fixed margin towards pay-for-performance schemes.
– Marketing spending effectiveness & investment optimization
BAT also states that gross margin of the overall cigarette category is 68-69% at group level. Heated tobacco have a similar margin, whereas nicotine pouches have a better margin. Consumables of vapor now is above 60% and increasing. However, there are [substantial] investments below the gross line, in terms of marketing spending and discounts to attract new consumers, that impacts the operating margin.
We note: Compared to the H1 2023 disclosure (see below), it seems that BAT achieved further improvement in the e-vapor gross margin (from 58% to above 60%). The gross margins for the other categories (cigarettes, heated tobacco and nicotine pouches) are mostly stable.
Deteriorating performance of VUSE in the US (due to the rampant growth in illicit disposable vapes) will weigh on the progression of BAT’s overall NGP profitability. Recall that, in FY23, VUSE sales in the US generated 57% of BAT’s global e-vapor revenue and close a third of its overall RRP revenue. For further details: BAT – H1 2024 Pre-close: Preview
Nevertheless, BAT is the second tobacco major (following the arch-rival, PMI) to achieve NGP break-even – well-ahead of any other competitor. This is a crown-jewel achievement even if the progression of BAT’s NGP category profit ends up to be non-linear as a result of circumstantial factors.
June 2024: The 2035 Ambition
[DB Global Consumer Conference] BAT presents the key assumptions behind the “50% of revenues from non-combustibles by 2035” ambition:
– Global nicotine revenue is growing: In FY23, 16.5% of BAT’s revenues were from non-combustibles (including the traditional oral tobacco products; +170bps vs. FY22). BAT has more than a decade to get to 50% in a revenue-wise growing industry.
– Fast-growing non-combustibles category: There are over a billion of smokers and just 100 million of non-combustible users (correction: RRPs only, excluding traditional oral) in the world today. However, the number of non-combustible users is growing exponentially.
– Multi-category approach: Having established strong global brands, BAT is in a good position to address the growth of segment of consumers that are more interested in products with a lower risk profile. BAT has global leadership in e-vapor, strong leadership in modern oral outside the US and #2 position in heated tobacco.
– More targeted investments to drive the momentum to achieve the 50% ambition while developing RRPs that are as profitable as the cigarettes in terms of gross margins (cigarette ≈ pod ≈ heatstick ≈ pouch)
We note: As of now, in 24 markets, more than 30% of BAT’s revenues are generated in non-combustibles; however, vast majority of these markets are EU markets in which BAT has insignificant / limited presence with the combustible category (- due to the historical reasons). On the bright side, transformation to RRPs offers BAT the opportunity to build a stronger presence in these markets. Nevertheless, the main challenge for the BAT’s “50% by 2035 ambition” will be to achieve (a certain level of) RRP growth momentum all across its global footprint (including the emerging markets in which BAT has a strong presence and the “reduced-risk awareness” is low).
More specifically, in the key US market (world’s largest RRP market), weight of non-combustibles is still below 20% (i.e. 18.2% in FY23) despite a strong traditional oral franchise (e.g. Grizzly) and distant leadership of VUSE in the e-vapor category (i.e. 13.3% for Altria with a limited contribution from e-vapor).
May 2024: BAT Malaysia – Q1 2024 Results
BAT Malaysia reports +5.6% revenue growth (to RM412 Mn) and -22% operating profit decline (to RM46 Mn) in Q1 2024. The profit decline is mainly attributed to the investments made in transitioning towards a multi-category business (combustibles & RRPs)4.
In terms of the operating environment in Malaysia, BAT points to the persistently high illicit tobacco market (55.9% incidence in Q1 2024) and nicotine consumption shifting to the growing e-vapour category. Moreover, BAT’s cigarette market share declined by 0.3% compared to Q4 2023 due to the intensified competition and downtrading.
BAT underlines that the strategic pivot towards RRPs, via VUSE, and the transition into a multi-category business will fuel the growth trajectory and supports the Control of Smoking Products for Public Health Act 2024 (Act 852). However, local market analysts debate whether BAT will be able to compensate the volume loss in highly consolidated Malaysian cigarette market (3 main players only) with the volume gains in highly fragmented e-vapour category (tens of players).
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