BAT cuts 9,000 roles in cost-saving drive

British American Tobacco will cut or outsource 9,000 roles this year, affecting nearly a fifth of its global workforce, as the maker of Lucky Strike, Dunhill and other cigarette brands seeks to lower costs while demand for traditional cigarettes declines.

The London-listed tobacco group said it would cut 5,500 jobs and outsource a further 3,500 roles as part of a transformation programme designed to save about £600 million a year by the end of 2028. The company currently employs 47,000 people worldwide.

BAT said the job cuts have already begun and are expected to be completed by the end of this year. It did not say where the roles being cut are located, but said its U.S. business, which operates under Reynolds American, would not be affected.

Chief Executive Tadeu Marroco said the changes were intended to make BAT “more agile, cost disciplined and technology enabled.”

“These changes affect many of our colleagues, and we are focused on supporting them through this transition with care and respect, as we position the business for the future,” he said.

The cuts come as one of the world’s largest tobacco companies faces falling demand for traditional cigarettes and increasing pressure to invest in alternatives such as vapes and nicotine pouches. BAT has predicted that global cigarette industry volumes will fall by about 2.5% this year, The Guardian reported.

The company has been investing heavily in smoke-free products, including Vuse vapes and Velo nicotine pouches. It told investors this month that revenue growth in its “new categories” business was accelerating, with mid-teen percentage growth expected this year.

BAT had previously signaled a push to simplify the business and make it more digital and focused on artificial intelligence. In February, interim finance chief Javed Iqbal told the Financial Times that the company’s plans would make it “more digital and AI-focused,” according to The Guardian.

Last year, BAT partnered with technology consultancy Accenture to outsource some work, a move Marroco said at the time would give the company access to Accenture’s “advanced AI solutions.” Some jobs in the UK, Poland, Romania, Costa Rica, Mexico, Singapore and Malaysia have been absorbed by Accenture since that agreement, BAT said, according to The Guardian.

The restructuring follows other changes in BAT’s traditional cigarette operations. In January, the company announced it would close its eighth-largest factory, in South Africa, citing competition from illicit trade, The Guardian reported.

BAT, a FTSE 100 company headquartered in London, makes cigarette brands including Lucky Strike, Dunhill and Peter Stuyvesant. Its announcement reflects a broader shift across the tobacco industry as cigarette sales shrink and companies invest more in nicotine alternatives.

Shares in BAT fell about 1.4% in early trading on Monday, though they remained up about 11.8% for the year to date, according to The Guardian. Shares in rival Imperial Brands also fell about 1% in early trading Monday.