British American Tobacco’s AI overhaul to affect 9,000 jobs

British American Tobacco is to alter the shape of its global workforce in a sweeping restructuring that will affect about 9,000 jobs, as the FTSE 100 company presses ahead with a £600 million programme of cost savings partly driven by automation and artificial intelligence.

The maker of Dunhill cigarettes, Vuse vapes and Velo nicotine pouches said it would cut 5,500 roles worldwide by the end of the year and move a further 3,500 jobs to strategic partners. The changes amount to almost a fifth of BAT’s 47,000-strong workforce and mark one of the most significant corporate reshuffles yet prompted by the spread of AI across large employers.

While the company did not disclose the full geographic breakdown of the job losses, it said the United States would not be included in the restructuring, despite being its biggest market. The latest plans do, however, extend to the UK and to other regions where BAT has already been simplifying parts of its operations through outside partnerships.

At the centre of the restructuring is a strategy BAT internally calls Fit2Win, a programme intended to create annual savings of about £600 million by the end of 2028. That target comes on top of £2 billion of savings the company had already set out between 2026 and 2030 at its capital markets day last year, underlining the scale of the pressure BAT is under to strip cost from a business that is still dependent on cigarettes even as it tries to grow faster in newer nicotine categories.

The company said the latest changes would make it “more agile, cost-disciplined and technology-enabled”. Tadeu Marroco, chief executive since 2023, sought to present the restructuring as a necessary adaptation to a changing market rather than a simple headcount reduction. “These changes affect many of our colleagues and we are focused on supporting them through this transition with care and respect,” he said.

Mr Marroco’s language reflects the delicate balance BAT is trying to strike. On one hand, it is confronting a structural decline in cigarette sales, tighter regulation and a steadily worsening public understanding of the health risks associated with tobacco. On the other, it is attempting to reposition itself as a broader nicotine and reduced-risk products company, with products such as Vuse and Velo central to its growth plans. The restructuring is therefore not only about cutting cost, but about recasting the organisation around a different commercial future.

A source familiar with the matter said the changes were partly driven by automation, including AI. BAT has recently launched Ask Omni, an AI-powered assistant for employees, which the company presents as part of a wider effort to modernise internal processes. The emergence of such tools has encouraged boards across a range of industries to examine whether long-established layers of administration and support can be compressed, outsourced or eliminated altogether.

BAT is not alone in making that calculation, though its scale gives the move particular significance. Global employers are increasingly using AI as a justification, and in some cases a genuine enabler, for revisiting their operating models. In BAT’s case, the technology sits alongside more traditional corporate levers such as outsourcing, shared services and process simplification. Last July, the company signed a strategic partnership with Accenture to simplify processes and strengthen compliance across the group, and that arrangement has already led to roles in the UK, Singapore, Costa Rica, Poland and elsewhere being transitioned to the consulting firm.

The latest plans also build on BAT’s existing work with ITC Infotech, through which information, digital and technology roles in Poland and Romania are being transferred. Taken together, the changes suggest a company moving steadily towards a more distributed and externally managed operational structure, with fewer functions retained in-house and a larger share of routine or standardised work delegated to specialist partners.

The impact on the UK will be closely watched. BAT said the transfer of roles to strategic partners would affect jobs in Britain, though it did not specify how many. For a company headquartered and listed in London, and long associated with the City’s industrial decline and reinvention, the decision is another reminder that the capital’s corporate giants are often making strategic choices in response to global rather than purely domestic pressures. It also speaks to a more general pattern among multinationals, in which UK jobs are frequently exposed to restructuring even when the commercial rationale is rooted in global cost discipline.

BAT’s share price fell 0.7 per cent, or 34p, to close at £47.17 on Monday after the announcement, suggesting investors viewed the move as broadly in line with the company’s existing emphasis on efficiency rather than as a dramatic surprise. Analysts have long argued that BAT’s large workforce has been difficult to justify in a business that, although global, is increasingly dependent on systems, data and standardised processes rather than the labour-intensive structures of an earlier era.

Rae Maile, an analyst at Peel Hunt, said the company’s headcount had always seemed large even by the standards of a multinational tobacco group. She suggested that tightening systems and processes “makes enormous sense”, while adding that cigarette pricing would continue to underpin revenue delivery. Her comment captures the basic commercial tension at BAT: the old business still funds the transition, but the transition cannot be allowed to erode profitability through rising costs or excessive complexity.

That tension has become more acute as BAT’s traditional business faces continued decline. Cigarette volumes have been falling for years, and the company, like its peers, has been forced to rely increasingly on pricing power to defend revenue. Such a strategy can support the top line for a time, but it becomes less effective if cost inflation and organisational inefficiency swallow the gains. BAT’s latest programme is therefore as much about protecting profit margins as it is about preparing for technological change.

The group’s focus on new products, including vapes, heated tobacco and nicotine pouches, remains central to its long-term strategy. BAT has said that stronger revenue growth from these categories is essential to offset the mature and declining cigarette market. In a trading update earlier this month, before its half-year results, the company reiterated full-year guidance at the lower end of its medium-term range, with group revenue growth expected at 3 per cent to 5 per cent and adjusted operating profit growth at 4 per cent to 6 per cent.

That update was notable in itself, indicating that BAT is still finding conditions challenging even as its newer product lines expand. In the United States, however, the company has said it expects stronger revenue growth this year for its new products, helped by reforms by the Trump administration. The US remains BAT’s largest market and a central arena in which the company is trying to secure a better balance between regulation, commercial opportunity and shifting consumer preferences.

There is a political dimension to that effort. The Times recently reported that BAT’s US business donated $18 million to a major Trump-aligned campaign group before a relaxation in vaping regulations. BAT responded by saying that, like many companies operating in the US, it participates in the democratic process lawfully and transparently to support informed policymaking and thoughtful regulation. The episode underlines the extent to which the industry’s future remains tied not just to technology and consumer behaviour, but to the shifting regulatory environment in which nicotine products are sold and promoted.

Meanwhile, BAT continues to navigate the broader reputational challenge that confronts all major tobacco groups. Public health concerns, tighter controls and changing social attitudes have made the sector less attractive to some investors and more difficult to manage as a conventional consumer goods business. Yet the company still has considerable global scale, substantial cash generation and a portfolio that spans both declining legacy products and newer formats that it believes can sustain growth.

For Marroco, the challenge is to make BAT leaner without undermining its ability to compete across markets that are changing at different speeds. The new restructuring suggests that he is willing to move more aggressively than some predecessors, using AI not as a slogan but as part of a wider redesign of how the company works. Whether the resulting organisation proves more nimble, and whether it can deliver the promised savings without disrupting execution, will become clearer over the next two years.

What is already clear is that BAT’s programme speaks to a wider moment in corporate Britain, in which large listed companies are using technology, outsourcing and cost control to respond to slower growth, regulatory strain and investor pressure. In BAT’s case, that process is taking place against the backdrop of a business model in transition, where the decline of cigarettes and the uncertain promise of new nicotine products make efficiency not simply desirable but essential.