Synopsis

British American Tobacco is slashing approximately 9,000 jobs globally as part of a major restructuring. This significant workforce reduction aims to cut costs and accelerate the company's pivot towards next-generation nicotine alternatives like vapes and pouches. The move, which includes outsourcing, is crucial for BAT's target of achieving substantial annual cost savings and repositioning itself in a rapidly evolving nicotine market.

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British American Tobacco (BAT) is eliminating about 9,000 jobs globally as the tobacco giant steps up a sweeping restructuring drive aimed at cutting costs and accelerating its shift away from traditional cigarettes, Bloomberg reported on Monday, citing an internal company notice.

The workforce reduction—equivalent to nearly one-fifth of BAT's 47,000 employees outside its US business—comes as the company grapples with weakening demand for combustible tobacco products while ramping up investments in next-generation nicotine alternatives such as vapes and nicotine pouches.

Also read: Two British American Tobacco-linked entities receive Rs 3,896 crore ITC dividend in FY26The internal notice outlined plans to eliminate 5,500 positions and outsource another 3,500 roles by the end of this year, the report added.

The move marks one of the biggest organisational shake-ups at the maker of Dunhill cigarettes as it pursues a target of delivering £600 million ($793 million) in annual cost savings by the end of 2028. The company is expected to brief investors on the restructuring as part of its strategy update.

The restructuring underscores BAT's attempt to reposition itself for a rapidly changing nicotine market, where consumers are increasingly moving away from conventional cigarettes in favour of smoke-free alternatives.

The company has set an ambitious goal of generating more than half of its revenue from non-combustible products, including its Vuse vaping devices and Velo nicotine pouches, mirroring a broader industry pivot led by rivals such as Philip Morris International.

The transition comes as demand for traditional cigarettes continues to decline across several markets, forcing tobacco companies to redirect capital towards products positioned as alternatives for adult smokers seeking to quit or reduce cigarette consumption.

Earlier this year, BAT projected that global cigarette industry volumes would contract by 2% in 2026, highlighting the structural pressures facing the sector.

Also read: BAT bets big on India again, as ITC seeks to expand tobacco trade deal

The latest job cuts are part of a broader operational overhaul that has already seen BAT shut several manufacturing facilities. In January, the company announced the closure of its South African cigarette factory, citing mounting pressure from illicit trade.

The restructuring also reflects BAT's increasing reliance on automation, artificial intelligence and outsourcing. Interim Chief Financial Officer Javed Iqbal had said in February that AI and data analytics would reshape staffing requirements, with roughly £500 million of the targeted savings expected to be achieved by 2027.

According to Bloomberg, BAT has expanded outsourcing partnerships with Accenture, transferring functions including service centres across countries such as the UK, Singapore, Costa Rica, Mexico, Poland, Romania and Malaysia. Certain operations in Pakistan have also been outsourced to local technology firm Systems Ltd.

"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," Chief Executive Officer Tadeu Marroco said in a statement.