BAT to cut 2,300 jobs as it moves to ‘new category’ business
More than 20% of senior roles will be affected as vaping and e-cigarettes — under fire due to health concerns — are seen as creating more growth
British American Tobacco (BAT) said on Thursday that it will lay off 2,300 employees globally by January, about 4% of its workforce, as the world’s second largest tobacco company by sales focuses on newer smoking options such as e-cigarettes.
More than 20% of its senior roles will be affected as the maker of Lucky Strike and Dunhill cigarettes eliminates duplicate roles and consolidates business units. BAT employs more than 55,000 people, according to its 2018 annual report.
The company has said it will invest in what it calls its “new category” business under CEO Jack Bowles and has announced plans to consolidate the portfolio. The division makes tobacco heating products glo and Vype e-cigarettes, as well as snuff and nicotine pouches.
“Since taking on the role of CEO five months ago [in April], I have been clear that I wanted to make BAT a stronger, simpler and faster organisation,” Bowles said on Thursday. “My goal is to oversee a step change in new category growth.”
BAT expanded by buying US rival Reynolds American for $49bn in 2017. The company said the planned changes would help the firm deliver on its target of generating £5bn ($6.2bn) of revenue in new categories by 2023/2024.
By focusing on the three new category brands, Bowles has said BAT will see less complexity and faster decision-making when responding to new trends.
This month, BAT said it would launch two new tobacco heating products in Japan under its glo brand. It is also seeking to close the gap with market leader Philip Morris International in the US’s fast-growing vaping industry.
BAT beat first-half sales forecasts last month, helped by higher demand for e-cigarettes, and predicts a stronger performance in the second half as it focuses on a smaller number of fast-growing brands.
Like its rivals, BAT is striving for higher smoking alternative sales as volumes of traditional cigarettes slide.
At the same time, however, health concerns more than e-cigarettes are increasing. The Trump administration announced plans on Wednesday to remove all flavoured e-cigarettes from store shelves as officials warned that sweet flavours had drawn millions of children into nicotine addiction.
Shares in FTSE 100-listed BAT were up 2.2% at 3,111p at 7.32am GMT.