BAT, best known for cigarette brands Lucky Strike and Dunhill, said today it expects revenue to rise 5% this year, the top of its previous range of estimates.
"New category" reduced risk products gained share in all key markets, including the United States and Japan, with the company adding 1.4 million new customers in the first quarter.
The company, which sells Vuse e-cigarettes and glo tobacco heating products, said users of its new products total 14.9 million.
BAT shares rose 43p to 2817p, leaving the giant business valued at towards £65 billion.
Jefferies analyst Owen Bennett said: “The upgrade and delivery around reduced risk products is particularly encouraging.”
The wider industry is expecting to see sales fall this year, while BAT is now predicting a recovery in emerging markets such as Pakistan and Vietnam.
BAT’s comments show more customers in the United States are switching to e-cigarettes before a possible U.S. ban on menthol cigarettes and flavoured cigars.
Health campaigns around the world are pushing down traditional smoking levels.
BAT Chief Executive Jack Bowles said: "We continue to expect 2021 to be a pivotal year for the business, with accelerating new category revenue growth (and) a clear pathway to new category profitability.”
BAT has invested nearly £500 million pounds in its new category products business last year. It has set a target of achieving 5 billion in sales for the business by 2025 and 50 million customers by 2030.
Alicia Forry at Investec says BAT is “approaching global leadership” in vaping, with market share topping 30% in many countries.