ritish American Tobacco (BAT) has hailed gaining 900,000 customers using new products like vapes in its first financial quarter, amid plans to encourage smokers away from traditional cigarettes.
But the company admitted it saw a “disappointing” performance in the US for cigarette brands like Camel, and an “underwhelming” start to the year for its Glo e-cigarette brand.
The FTSE 100-listed group has been steaming ahead with growing its portfolio of so-called reduced-risk products, which includes vapes, e-cigarettes and nicotine pouches.
It said it is on track to make £5 billion in revenue from tobacco alternatives by 2025 and for the category to be profitable by 2024.
Our performance in US combustibles has been disappointing
New chief executive Tadeu Marroco insisted that BAT’s strategy has not changed since he took over at the helm last month, and pledged to reduce the “health impact” of the business.
“Put simply, smokers must have access to better choices,” he said.
“This is already a reality for smokers who have made the switch to our reduced-risk products. It also represents a commitment to our consumers who continue to smoke and are yet to make that transition.”
Nevertheless, he said that traditional cigarettes, known as combustibles, are a critical part of the group’s “multi-category strategy” in the US.
Mr Marocco added: “Our performance in US combustibles has been disappointing. We are taking action, and, while it will take some time to carefully and thoroughly implement our plans, our volume share has grown sequentially since the start of the year.”
Outside the US, BAT said its cigarette brands like Lucky Strike and Dunhill have been performing well after it raised prices.
BAT’s e-cigarette brand, Glo, also saw a slow start to the year with its volume share down 1.1 percentage points over the first quarter.
Sales momentum in Europe was offset by highly competitive e-cigarette markets in Japan and Italy.
The global tobacco industry volume is expected to decline by around 3% in the year ahead, BAT said.
But the firm expects to see organic revenue growth across its own products of 3% to 5% for the 2023 financial year.
It predicts its performance will be weighted in the second half of the financial year, with sales affected by the sale of its Russian and Belarusian businesses set to close this year.
The firm stuck by its guidance for the financial year.
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