British American Tobacco targets 50m smoke-free consumers

British American Tobacco has raised sales guidance for its smoke-free products as demand continues to grow for the group’s tobacco and nicotine products.

The owner of Rothmans and Lucky Strike still expects to increase its turnover and adjust profit from operations to a ‘low-single digit’ percentage this year.

Revenues from traditional tobacco products and new segments are expected to increase in the last six months of 2024 compared to the first half.

The FTSE 100 group said Vuse has maintained its dominance in global fog markets, such as the UK, Germany and the US.

BAT also said its Velo nicotine packs enjoyed strong volume, sales and profit growth in part due to the launch of the brand in the UK and Poland.

However, the firm said that the demand for Vuse and lighters in the US continues to be affected by the spread of illegal vaping products.

Like other cigarette retailers, BAT is expanding its reach in response to public awareness of the dangers of tobacco.

It aims to have 50 million consumers using its non-fashion items, such as boots and tobacco coolers, by 2030, and to get half of its sales from them by 2035.

Tadeu Marroco, CEO of BAT, said: ‘Our qualitative growth is to generate higher returns on higher investments across three new sectors.

‘We continue to make progress in increasing productivity across new categories, and I am particularly pleased with the improvements in hot products and the new mouthpiece.’

Marroco also said the company expects to ‘clarify the financial implications’ of a legal case involving its Imperial Tobacco Canada (ITCAN) subsidiary when it releases full-year results in February.

In October, BAT revealed it had submitted a plan to a Canadian court that could lead to a major lawsuit.

A famous court decision in 2015 found that ITCAN, Philip Morris and Imperial Tobacco, were aware of the health problems associated with smoking but did not adequately warn their customers.

The three firms were ordered to pay CA$15.6 billion in a lawsuit brought by more than one million current and former smokers in Quebec, as it was one of the Canada’s largest class action lawsuit.

Shares of British American Tobacco rose 0.6 percent to 2,987 pi on Wednesday morning, taking them up 28 percent this year.

Richard Hunter, head of markets at Interactive Investor, said: ‘The group remains committed to a higher level of shareholder returns as well as other buyback initiatives, despite the investment that required for the transfer of the company.

‘However, in the near term, the market believes that Imperial Brands will remain the best in the sector, with BATS coming in to hold, albeit strongly.’