British American Tobacco (BAT), the maker of Lucky Strike and Dunhill, has announced plans to reduce its workforce by about 20 per cent as part of a major cost-cutting programme. The company will cut around 5,500 jobs directly and move another 3,500 roles to third-party firms such as Accenture, affecting about 9,000 employees in total. The restructuring does not include the US, which is BAT’s largest market. The overhaul is expected to deliver £600 million in annual savings by 2028, with £500 million targeted by 2027.
The reason for this move is that BAT is facing declining sales in traditional tobacco, regulatory challenges, and delays in launching new products. The company is shifting focus to smoking alternatives such as vapes and nicotine pouches, which require fewer workers to produce.
Shares fell about 2 per cent following the announcement, underperforming the FTSE 100 index. Analysts noted that the scale of the cuts was larger than expected and may signal deeper challenges in meeting medium-term growth targets.
The company has pledged to grow revenue by 3–5 per cent annually, but recent performance has been sluggish, often missing or only just meeting targets. The company has already been streamlining operations over the past two years, including closing a factory in South Africa.
Tadeu Marroco, CEO, BAT, reportedly said the restructuring aims to make BAT more agile, cost-disciplined, and technology-enabled. While the changes are designed to strengthen profitability, they will significantly affect employees across multiple regions.
Clearly there is a pressure on tobacco companies to adapt as demand for traditional products declines and competition in newer smoking alternatives intensifies.