British American Tobacco to cut 5,500 jobs: What's changing in the industry?

British American Tobacco (BAT) said it will eliminate 5,500 jobs globally and outsource an additional 3,500 roles as part of a restructuring plan designed to reduce costs and streamline operations.

The company expects the changes to generate annual savings of around £600 million (approximately $792 million) by 2028.

The restructuring will affect roughly 20 per cent of BAT's global workforce of around 47,000 employees.

Shift away from traditional cigarettes

BAT said the restructuring is intended to create a more agile, technology-driven organisation as consumer demand for conventional cigarettes continues to decline.

Like other major tobacco companies, BAT has increasingly focused on expanding its portfolio of reduced-risk products, including vaping devices and oral nicotine products, as smoking rates fall in many markets.

BAT Chief Executive Tadeu Marroco said the company is reshaping its business to prepare for future growth. "We are building a future-ready organisation that is more agile, cost disciplined and technology enabled," Marroco said in a statement.

He acknowledged the impact on employees, adding that the company would support affected staff throughout the transition.

US operations unaffected

The company said the job cuts will apply across its global operations but will not affect its United States business, which operates through subsidiary Reynolds American.

The US remains BAT's largest market.

BAT shares fell about 1.5 per cent in London trading following the announcement.

Market analysts said the restructuring reflects a broader trend of companies adopting new technologies and automation while responding to changing consumer preferences.

Investment director Russ Mould of AJ Bell said the scale of the job reductions highlights growing pressure on businesses to improve efficiency while raising concerns about the wider labour market.

The tobacco industry has been undergoing significant change as stricter regulations, public health campaigns and shifting consumer habits reduce demand for combustible cigarettes.

Major manufacturers, including BAT, have invested heavily in alternative nicotine products in an effort to diversify revenues and adapt to changing market conditions.