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Cigarette giant behind Lucky Strike cuts 2,300 job amid shift to vaping

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A museum worker holds a pack of Lucky Strike cigarettes used on the set of the television series 'Mad Men'. Photo: Kevin Lamarque/Reuters

British American Tobacco (BATS.L), the cigarette giant behind brands like Lucky Strike and Rothman’s, has announced plans to cut 2,300 jobs globally.

BAT, which employs 55,000 people worldwide, announced the layoffs on Thursday. It didn’t say where the job cuts would fall geographically but said it would mostly affect management.

Around 20% of senior roles at the company are at risk as part of a push to reduce management layers. BAT is now consulting with affected staff.

Jack Bowles, chief executive of BAT, said the cuts were “difficult for our people, but ultimately it is the right thing for our business.”

BAT, which also owns brands like Dunhill and Benson & Hedges, said the redundancies would allow it to focus on the “ever evolving consumer needs” by investing in what it called “next generation” products.

Customers globally are increasingly shunning cigarettes in favour of vaping or other alternatives. BAT, like other legacy cigarette companies, has been trying to keep up with the shift.

BAT owns the vaping brand Vype and Glo, a tobacco heating alternative, that is highly popular in Japan. The business is investing heavily in cigarettes alternatives and hopes to have sales of £5bn from these new high-growth products by 2023-24.

Bowles said: “Since taking on the role of chief executive five months ago, I have been clear that I wanted to make BAT a stronger, simpler and faster organisation, and ensure a future fit culture.

“My goal is to oversee a step change in new category growth and significantly simplify our current ways of working and business processes whilst delivering long-term sustainable returns for our shareholders. This is a vital first move to help achieve these goals.”

BAT operates across more than 200 markets worldwide, but the UK is one of its smaller markets. It has a development office in Southampton where it works on its vaping and tobacco heating products.

BAT is not alone in focusing on vaping and smoking alternatives. Rival Philip Morris (PM), which makes Marlboro cigarettes, has said it wants to create a “smoke free future”. The major legacy players are under pressure from declining smoking levels in the developed world and the rise of challenger brands such as Juul in the vaping market.