By Timothy S. Donahue

Top Takeaways:

• Strategy focus: BAT says transformation to “Smokeless World” is accelerating with growing consumer adoption
• Regulatory tension: Chair warns bans and restrictions are fueling illicit trade and slowing harm reduction
• Financial outlook: Company targets steady growth while returning billions to shareholders

British American Tobacco is leaning harder into its smokeless transition and pushing back against regulators it says are getting it wrong.

Speaking at the company’s 2026 annual general meeting, BAT Chair Luc Jobin framed the company’s strategy as both proven and increasingly urgent, citing growth in non-combustible products, rising consumer adoption, and what he described as mounting evidence supporting tobacco harm reduction.

“Our vision to Build a Smokeless World is absolute,” Jobin said.

That vision is not theoretical, he argued—it is already translating into measurable progress.

“The number of consumers choosing our Smokeless products increased by more than 15% year-on-year, taking us closer to our target of 50 million consumers by 2030,” Jobin said, adding that BAT’s New Categories business also delivered “a significant improvement in category contribution.”

The company’s transformation strategy, branded internally as “Fit2Win,” is central to that push.

“This is a transformational three-year programme that is re-inventing our business,” Jobin said. “It means we will be sharper, faster and more data-driven, with the right capabilities for the future.”

BAT delivered at the “top end” of its 2025 guidance, he noted, highlighting a return to growth in the U.S. and strong performance from products such as Velo Plus, along with £6.3 billion returned to shareholders through dividends and buybacks.

But beyond the numbers, Jobin’s message was clear: the company sees its future—and the industry’s—in reduced-risk products.

“When it comes to our New Category products, we have an excellent evidence base,” he said, pointing to “decades of research, hundreds of peer-reviewed studies, and thousands of patents.”

“The weight of evidence is compelling… demonstrating that our Smokeless products have significantly lower toxicant levels compared to cigarettes.”

That scientific foundation, he argued, should be driving policy. Instead, in some markets, it is being ignored.

“We have also seen what happens when regulation misses the mark,” Jobin said, singling out countries where restrictions on vapor products have tightened. “In Australia, vapour products require a prescription. In Brazil, they’re banned outright. In both countries illicit trade is thriving and smoking rates are rising.”

The implications, he warned, extend beyond the industry.

“This should concern everyone. It threatens progress… makes illicit products accessible to youth, and denies adult consumers access to Smokeless products.”

For BAT, the issue is not regulation itself—but how it is applied.

“Engaging in an evidence-based dialogue with key stakeholders… is critical to help shape sensible and proportionate regulation,” Jobin said, emphasizing the company’s push for frameworks that encourage smokers to switch rather than restrict alternatives outright.

He pointed to markets where harm reduction has gained traction.

“Countries like Sweden, the UK and the U.S. are demonstrating what is possible. When Tobacco Harm Reduction is embraced, smoking rates fall faster,” he said.

The company has built that argument into a broader advocacy platform, including its “Omni” initiative, which Jobin described as “our dynamic, evidence-based manifesto for change.”

“We know that lasting change is only possible through genuine dialogue, with a clear view of the facts,” he said.

At the same time, BAT is investing heavily in the capabilities it believes will define the next phase of growth. Jobin highlighted six core areas underpinning the company’s strategy, including advanced consumer insights, science and R&D, global distribution, regulatory engagement, and digital infrastructure.

“Our brands are available… in more than 140 countries, across millions of outlets,” he said, describing the company’s distribution network as “unparalleled in its reach.”

That scale is being paired with technology. “We have also invested in technologies, including AI and machine learning, to help us get our products to the right place at the right time,” Jobin said.

Digital integration is also shaping product development. “Our glo Hilo and Vuse Ultra devices… enhance the consumer experience, with a fully-connected digital ecosystem,” he said, pointing to how products are evolving alongside consumer expectations.

At the same time, the company is addressing one of the industry’s most persistent challenges—youth access. “Our position is clear: no underage person should use tobacco or nicotine products,” Jobin said.

BAT has launched age-estimation technology pilots in multiple markets, enabling more than 38,000 age checks to date, alongside ongoing engagement with policymakers on retail licensing and enforcement frameworks.

“This… is how we are leading from the front and calling for clear guardrails to protect the underaged,” he said.

Looking ahead, Jobin struck a confident tone on the company’s financial trajectory. “We enter 2026 with accelerating momentum,” he said, supported by “a strengthened innovation pipeline, deep strategic partnerships and growing confidence in our future-fit capabilities.”

BAT is targeting mid-term growth of 3–5% in revenue, 4–6% in adjusted operating profit, and 5–8% in adjusted earnings per share, while continuing to generate strong cash flow. “BAT continues to be highly cash generative, and we expect to deliver over £50 billion of free cash flow between 2024 and 2030,” Jobin said.

That cash flow supports both investment and shareholder returns. “This year, we have announced a 2% dividend increase and a £1.3 billion share buy-back,” he noted, adding that the company remains committed to balancing reinvestment with returns.

Still, Jobin acknowledged that the external environment remains complex. “In 2026, complexity and volatility continue to shape the world around us,” he said, noting that BAT has activated business continuity plans and is monitoring geopolitical risks, including developments in the Middle East.

Even so, the company’s long-term direction is unchanged. “BAT is a company with a clear purpose… to be a predominantly Smokeless business by 2035,” Jobin said.

In closing, he returned to the broader transformation underway across the industry. “Our journey to a Smokeless World is real and it’s happening now,” Jobin said. “I firmly believe were it not for the stigma that surrounds the industry, our transformation to date would be considered extraordinary.”