British American Tobacco (BAT), one of the world’s largest cigarette suppliers, has doubled down on its new categories such as vaping as the tobacco industry shrinks.
The London-listed company’s revenue has grown in the past few months, despite the public in both Europe and the US leaning away from smoking.
The shift away from smoking has been accelerated by the Covid-19 pandemic on both sides of the Atlantic, with bosses at BAT now expecting full year tobacco volumes to remain down around two per cent across the globe.
The business had initially thought volumes would slip even further, but Covid-19 recoveries in emerging markets has sparked an uptick in tobacco sales, the company said.
BAT has recorded between two and four per cent revenue growth for the second quarter, the company added, as it held back a figure until its upcoming financial update.
Chief executive Jack Bowles said the company will continue to invest in its new categories, as the company seeks to trim its operating losses.
“We expect growing contribution across all New Categories, and all Regions in 2022. We are confident in delivering our targets of £5bn revenue, and profitability by 2025,” he said in a statement.
“In the US, industry volumes remain under pressure due to ongoing macro-economic factors and post-Covid normalisation of consumption patterns. In order to offset early signs of accelerated downtrading in the industry in the second half of the year, we have recently activated commercial plans across specific brands, channels and states.
“We expect to deliver strong adjusted operating margin improvement despite increasing inflation in our supply chain. This has been made possible through robust pricing, the scale of our brands and increasingly focusing our marketing investments. Our three year Quantum programme is expected to deliver in excess of £1.5bn annualised cost savings by the end of 2022.”