By Peter Stiff
LONDON -- British American Tobacco PLC plans to cut thousands of jobs in a restructuring aimed at boosting the growth of new products as traditional cigarette volumes decline.
The maker of the Kent, Dunhill and Lucky Strike brands, like much of the industry, is pushing further into vapor, oral and tobacco-heating products, which are tempting away smokers. BAT already sells Vuse e-cigarettes and the Glo heated-tobacco product.
But these new categories require investment and quicker decision-making to respond to fast-changing consumer tastes, growing competition and emerging regulation.
BAT on Thursday said reducing management layers and moving to fewer, larger business units would make it more agile, eliminate duplication and generate cost savings that could be reinvested in new products. In total it said 2,300 roles would be cut, affecting more than 20% of the senior positions at the company. BAT has over 55,000 employees.
New Chief Executive Jack Bowles, who took the helm 5 months ago, said the streamlining was necessary to boost growth in new products and simplify the company's operations. As a result, he said the company would be in a better position to achieve its goal of generating GBP5 billion (about $6.16 billion) of revenue from new categories by the financial year ending 2024. Last year, adjusted revenue from vapor and heated-tobacco products rose 95% to GBP901 million.
The company, the No. 2 U.S. cigarette maker behind Altria Group Inc., declined to disclose how much it would save from the restructuring. It said the process would be substantially complete by January 2020.
A BAT spokeswoman said the move was unrelated to coming regulation of vaping products in the U.S.
President Trump said Wednesday the U.S. plans to pull most vaping products from the market, citing growing concerns about health hazards and rising use by teenagers. BAT has said it doesn't sell flavors that mimic children's food or appeal to youth.
Shares in BAT were up 1.5% in morning trading in London.
Write to Peter Stiff at firstname.lastname@example.org