British American Tobacco (BAT) has announced plans to cut 2,300 jobs by 2020 in readiness for a shift towards non-tobacco products, a day after Donald Trump said he was considering a ban on flavoured e-cigarettes.
The vast majority of BAT’s £24.5bn revenue in 2018 came from traditional cigarettes – its brands include Rothmans, Dunhill and Lucky Strike – but the company said it could save money to invest in alternative products such as vaping and heated tobacco by stripping out layers of management around the world.
A spokesperson declined to say how many of the job cuts would fall in the UK, where 2,500 of its 55,000 staff are based, including at its London headquarters.
The chief executive, Jack Bowles, who took over this year after the eight-year tenure of Nicandro Durante, said he wanted to make BAT “a stronger, simpler and faster organisation” that was ready for a future in which people moved away from cigarettes.
He said BAT aimed to derive £5bn of its revenue from what it called “new category” or “potentially reduced-risk products” by the 2023/24 financial year.
That would mean more than doubling the £1.8bn it made last year from vaping, tobacco-heated products and oral tobacco, which includes pouches such as Snus, popular in Scandinavia.
On Wednesday Trump unveiled proposals to ban certain flavoured e-cigarettes in the US to limit their use by teens, amid concern about a mysterious lung illness has killed at least five people and hospitalised others.
The US is a large and growing market for BAT’s vaping products, led by its flagship brand Vype. Of the £1.8bn it already makes from products other than cigarettes, £318m comes from vaping.
A spokesperson for BAT declined to comment on whether Trump’s plans could punch a hole in its £5bn revenue target for “potentially reduced-risk products”.
The company said: “We welcome the Trump administration and the FDA shining a spotlight on the important issue of youth access to vapour products. We have always been clear that youth should not use vapour products and have had stringent measures in place to address this for some time.
“We share President Trump’s concern that some flavours, such as those resembling ‘kid-friendly’ food products, may play a role in increasing youth appeal and that marketing activities should not be directed to youth.
“It is important to note that we do not market such vapour flavours and in fact we have supported measures to remove vapour products intended to mimic children’s food products or otherwise designed to target youth, and have procedures in place to ensure our products are only marketed to adult tobacco consumers.”
BAT said it would continue to work with the FDA but made no mention of concern among US health professionals about potential links between vaping and lung disease.