British American Tobacco is eliminating roughly one-fifth of its global workforce this year, marking one of the largest restructurings in the company's recent history as it confronts declining cigarette demand and races to build an artificial intelligence-powered operation.
The London-listed FTSE 100 company said it will cut 5,500 positions outright while outsourcing 3,500 more jobs, affecting 9,000 workers across its 47,000-person payroll. The overhaul is designed to slash £600 million in annual costs by the end of 2028 as BAT transforms itself into what leadership calls a "future-ready organisation."
Chief Executive Tadeu Marroco framed the restructuring as essential to survival in a shrinking market. "We are building an organisation that is more agile, cost disciplined and technology enabled," he said, pledging support for affected employees during the transition.
The cuts will spare BAT's American operations, which run under the Reynolds American subsidiary. However, jobs in the UK, Poland, Romania, Costa Rica, Mexico, Singapore and Malaysia have already begun shifting to Accenture, a technology consultancy that partnered with BAT last year to handle outsourced work and provide what the company describes as "advanced AI solutions."
BAT is under intense pressure from two sides. Global cigarette consumption continues its long decline, with the industry expecting about 2.5% volume losses this year alone. Simultaneously, the company faces mounting calls to transition away from traditional tobacco toward smoke-free alternatives like its Vuse vape and Velo nicotine pouch brands, where mid-teen percentage revenue growth is expected this year.
The restructuring reflects a broader industry pivot. Earlier this month, interim finance chief Javed Iqbal told the Financial Times that the company's simplification strategy would make BAT "more digital and AI-focused." That shift came as the tobacco maker has already begun shutting factories producing traditional cigarettes, including an announcement in January to close its eighth-largest factory in South Africa due to illicit trade competition.
The market's initial response was muted. BAT shares fell 1.4% in early trading on the announcement, though the stock remains up 11.8% for the year. Shares in rival Imperial Brands dropped 1% on the same day.
Author James Rodriguez: "BAT's pivot to AI and nicotine alternatives is less about innovation and more about survival in a sector that's been in structural decline for two decades."
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