BAT predicts fast growth in smoking alternatives for the next decade

British American Tobacco Forecasts Fast Growth in Smoking Alternatives to 2030

BAT's Strategic Outlook and Revenue Projections

By Emma Rumney

Revenue Growth Driven by Smoking Alternatives

LONDON, Sept 29 (Reuters) - British American Tobacco said on Tuesday it expects annual revenue from selling smoking alternatives to grow by a mid-teens percentage until 2030, driven by nicotine pouches. 

Investor Day Highlights

• The world's second-largest tobacco maker by market value hosted an investor day on Tuesday, where it outlined its strategy for growth until the end of the decade

Nicotine Industry Revenue Forecasts

• BAT said it expects nicotine industry revenues to grow 4% between 2025 and 2030, driven by smoking alternatives. Nicotine pouch industry revenues will triple, and such products will be BAT's main growth driver, it predicted

• It had already forecast mid-teens revenue growth from smoking alternatives for 2026 and now expects this to continue in the years ahead

Optimism Around Nicotine Pouches

• Its rising ambitions reflect growing optimism around the potential of nicotine pouches and fast growth in BAT's pouch label Velo, after years of difficulties with its vape and heated tobacco brands

Profitability and Margin Expectations

• It also expects the "contribution margin" from smoking alternatives — a measure of how profitable they are — to reach at least 30% by 2030, against 13.3% in June 2026.

Strategic Focus and Market Adaptation

Shifting Focus from Cigarettes to Alternatives

• BAT, which makes cigarette brands such as Dunhill and Lucky Strike, has been trying to grow revenues from other nicotine products amid long-term declines in smoking in some key markets

Investment and Market Prioritization

• In cigarettes, BAT will focus investments on 20 markets that deliver 80% of industry revenue, executives said. It expects global tobacco industry volumes to decline 2.5% between 2025 and 2030

Integration of AI and Technology

• BAT is also striving to integrate AI in areas such as product development, marketing and manufacturing, they continued.

Financial Guidance and Future Outlook

Revenue and Profit Guidance for 2026

• The company also said it remains on track to deliver at the lower end of its guidance for revenue growth of between 3% and 5% and growth of 4% to 6% in adjusted profit from operations in its 2026 financial year

(Reporting by Emma Rumney. Editing by Jan Harvey and Mark Potter)