British American Tobacco (BAT) is set to reshape its global workforce, announcing plans to eliminate thousands of positions as part of a sweeping cost-cutting and technology transformation
strategy aimed at improving profitability.
The tobacco giant revealed it will cut approximately 5,500 jobs while transferring another 3,500 roles to external service providers, including consulting firm Accenture. In total, around 9,000 employees—roughly one-fifth of BAT's workforce—will be affected. The restructuring will not impact operations in the United States, the company's largest market.
The initiative forms part of BAT's AI-driven productivity programme, which is expected to generate an additional £600 million ($793 million) in annual savings by 2028. The company has already targeted £500 million in savings by 2027.
Chief Executive Tadeu Marroco said the restructuring is designed to make BAT more agile and technologically advanced while maintaining a disciplined approach to costs. He acknowledged the impact on employees, stating that the company is committed to supporting affected staff throughout the transition.
The move comes as BAT faces mounting pressure from declining cigarette sales and increasing regulatory challenges across key markets. Traditional tobacco products, which remain the company's primary source of profit, continue to experience long-term decline, with BAT forecasting a 2.5% contraction in the global tobacco industry this year.
To offset weakening cigarette demand, BAT has been expanding its portfolio of reduced-risk products, including Vuse vaping devices and Velo nicotine pouches. However, the company has struggled to keep pace with competitor Philip Morris International, while regulatory delays in the United States have slowed product launches and allowed unauthorized rivals to gain market share.
BAT has also faced softer tobacco sales in the U.S. as consumers shift toward lower-priced brands amid persistent cost-of-living pressures. Meanwhile, higher excise duties, tighter regulations, and illicit tobacco trade continue to weigh on performance in markets including Australia and Bangladesh.
Although BAT previously indicated in February that its productivity programme could result in job reductions, analysts said the scale of the restructuring exceeded expectations. Barclays analyst Pallav Mittal described the cuts as broad-based, suggesting the announcement could surprise investors.
Shares in BAT fell 1.3% in early trading following the announcement.
The company said most affected employees have already been informed, with the remaining consultations continuing in accordance with local employment regulations. Photo by H005, Wikimedia commons.
