British American Tobacco to cut 9,000 jobs to save £600m

British American Tobacco will cut 9,000 jobs by the end of this year as it accelerates a severe cost-saving drive. The maker of Lucky Strike and Dunhill is shedding 5,500 roles directly and outsourcing a further 3,500 positions. While the company has not specified where the axe will fall, it confirmed that the United States is excluded from the reductions.

The layoffs represent nearly a fifth of the company's 47,000-strong global workforce. The restructuring is expected to deliver annual savings of £600 million by 2028. Chief executive Tadeu Marroco said the reductions would make the business "more agile, cost disciplined and technology enabled", reflecting a strategic shift toward artificial intelligence and digital operations announced earlier this year.

For a European industry giant, this drastic workforce reduction underscores the immense financial strain of moving away from combustible cigarettes. Consumers are increasingly abandoning traditional smoking for alternatives. BAT is attempting to pivot toward newer categories like its Vuse vapes and Velo nicotine pouches, but this transition has produced sluggish sales and profit margins in recent years.

The company is navigating a storm of overlapping market headwinds. In its largest market, the US, persistent cost-of-living pressures have pushed consumers toward cheaper cigarette brands, eroding BAT's market share. Simultaneously, the company is battling rising duties and increasingly strict regulatory frameworks across multiple international markets.

Regulatory gridlock in America has compounded these issues. Authorities have taken a tough stance on approving licences for new vaping products, a delay that BAT argues has allowed illegal Chinese alternatives to flood the market. "The tobacco industry has found the transition from cigarettes to next-generation products to be a slow one," said Dan Coatsworth, head of markets at AJ Bell. "Vaping is now commonplace, yet product manufacturers are battling challenging market conditions caused by a proliferation of illegal products."

The job cuts, which have already begun, signal that management is prioritising aggressive margin protection over steady headcount. "These changes affect many of our colleagues, and we are focused on supporting them through this transition with care and respect," Marroco said, "as we position the business for the future."