The aim of the world’s biggest tobacco firms of being a “smokeless” business amid tougher rules and changing opinions to smoking is in “sharp focus”, experts say.
The issues facing the industry will come to the fore when British American Tobacco (BAT), which is listed on London’s FTSE 100 index, publishes its half year financial results on Tuesday.
BAT has for a number of years been shifting its focus away from cigarettes and towards newer products like vapes and nicotine pouches to meet the changing market.
This has prompted the company to say it is aiming to be a “predominately smokeless” business by 2035.
Despite this, smokeless products made up about 18% of the group’s total revenues last year, with the rest coming primarily from cigarette brands including Lucky Strike, Pall Mall and Dunhill.
Sales from its cigarettes business totalled £20.2 billion for the year, while it made £3.6 billion from so-called new category products, which includes vape brand Vuse and nicotine pouch Velo.
BAT nonetheless says it is getting millions more customers each year for its smokeless brands.
The company said at the start of the year that it was expecting total revenues to rise between 3% and 5% in 2026, and new category products seeing double-digit growth, with investors keeping watch of any updates to the guidance on Tuesday.
Richard Hunter, head of markets for Interactive Investor, said: “BAT is continuing to position itself to reflect the changing landscape of smokeless products, while navigating an ever-growing number of hurdles.
“The pressure on traditional tobacco products has been in evidence for some considerable time, driven both by changing lifestyle habits as well as increasing regulation.
“There have been several instances of governments toughening their stance on tobacco sales, especially to youngsters, which adds to the burden of regulatory censure which has plagued the sector over recent years.
“In addition, and quite apart from this general decline in traditional tobacco products sales as health issues come to the fore, there is a reluctance among some investors to invest in the sector at all on ethical grounds.”
Mr Hunter said the issues are in “sharp focus” for investors who will be looking for more progress on the group’s transition.
