British American Tobacco plans to cut or outsource about 9,000 jobs this year as the company moves to reduce costs, simplify operations and become more focused on technology and artificial intelligence.
The London-listed tobacco giant, known for brands including Dunhill, Lucky Strike and Vuse, said the restructuring will affect roughly one-fifth of its global workforce. BAT currently employs about 47,000 people. The company said it expects to cut 5,500 roles directly and outsource another 3,500 jobs by the end of the year.
The move is part of a wider transformation program that BAT says could deliver about £600 million in annual savings by the end of 2028. Chief executive Tadeu Marroco described the plan as an effort to build a “future-ready” organization that is more agile, cost-conscious and technology enabled.
The company said it will support affected workers through the transition, though the scale of the cuts is likely to raise concern among employees in multiple countries. BAT said its U.S. business, which operates through Reynolds American, will not be affected by the job reductions.
TRENDING TODAY
The restructuring comes as traditional cigarette sales continue to decline in many markets. BAT has forecast that global cigarette industry volumes will fall by about 2.5% this year. Like other major tobacco companies, BAT is trying to offset that decline by investing in smoke-free and alternative nicotine products such as Vuse vapes and Velo nicotine pouches.
The company has told investors that revenue growth in its “new categories” business is accelerating, with mid-teen percentage growth expected this year. That shift is important because tobacco companies are under pressure to prove they can grow even as smoking rates fall and regulators increase scrutiny of cigarettes.
AI is also becoming a bigger part of BAT’s cost-cutting strategy. Last year, the company partnered with Accenture to outsource some work and gain access to advanced digital and AI tools. Some roles in countries including the UK, Poland, Romania, Costa Rica, Mexico, Singapore and Malaysia have already been absorbed through that arrangement.
BAT has framed the changes as a necessary modernization effort. But for workers, the announcement is another example of how large companies are using AI, outsourcing and digital restructuring to reduce headcount. While executives often describe these changes as efficiency improvements, employees may experience them as job insecurity and pressure to adapt quickly to new technology.
The tobacco industry is also facing a complicated future. Traditional cigarettes remain highly profitable, but demand is shrinking in many countries. At the same time, newer products such as vapes and nicotine pouches face their own regulatory challenges, especially over youth use, marketing practices and health concerns.
For investors, BAT’s job cuts may signal a stronger push to protect margins while funding growth in alternative products. For employees, the changes could mean uncertainty about which roles remain essential as the company becomes more automated and digitally focused.
The company has already been reducing parts of its traditional cigarette manufacturing footprint. Earlier this year, BAT announced the closure of a major factory in South Africa, citing pressure from illicit trade. The latest job cuts suggest the group is preparing for a smaller, leaner operating structure as it tries to reposition itself for a market less dependent on cigarettes.
Shares in BAT fell slightly in early trading after the announcement, though they remained up for the year. Rival Imperial Brands also saw a small decline, suggesting investors are watching the broader tobacco sector closely as companies adapt to falling cigarette volumes and rising technology costs.
The bigger question is whether BAT’s shift toward AI and smoke-free products can create sustainable growth while reducing reliance on traditional tobacco. The company is betting that fewer employees, more outsourcing and stronger digital systems will help it compete in a changing nicotine market.
Why It Matters
BAT’s decision shows how AI and outsourcing are reshaping even long-established industries. The cuts affect thousands of workers and highlight the pressure on tobacco companies to reduce costs while moving away from traditional cigarettes.
What Comes Next
BAT will begin cutting and outsourcing roles through the end of the year while continuing to invest in vapes, nicotine pouches and digital operations. Investors will watch whether the restructuring delivers the promised £600 million in annual savings by 2028.
