From leading cigarette brands to new categories of reduced-risk products*†
BAT is a leading consumer-centric, multi-category consumer goods business dedicated to stimulating the senses of adult consumers worldwide. Our portfolio reflects our commitment to meeting the evolving and varied needs of today’s consumer who seeks sensorial enjoyment for different moods and moments.
For decades, we built our business on meeting the preferences of adult smokers with leading cigarette brands, superior products and market-leading innovations.
However, we recognise the world is changing.
Today we have an evolved strategy that puts a sharper focus on our New Category products, fuelled by investment from the continued delivery of our traditional tobacco business.
Our clear purpose is to build A Better Tomorrow™ by reducing the health impact of our business.
As such, alongside our traditional cigarette products, our broad portfolio of non-combustible products includes reduced-risk*† alternatives such as vapour products, tobacco heating products, and modern oral nicotine pouches, as well as traditional oral products such as snus and moist snuff
We have increased the number of non-combustible product consumers by 3 million, reaching 13.5 million, and remain on track for 50 million by 2030. We also continue to accelerate the growth of our New Category revenues at a faster rate than our total revenue (New Category revenues grew by 15% in 2020). Our ambition remains to reach £5 billion in 2025.
With our global scale and the strength of our commitment, we remain perfectly positioned to capitalise on this ambition: providing adult consumers with more choice, more innovation and less risk*†.
We believe that by providing a range of high quality, innovative products, many millions of smokers will increasingly make the choice to switch.
Today, 13.5 million consumers regularly use one of our non-combustible products*† across over 50 markets. And we are expanding to further markets as quickly as we can. The global COVID-19 pandemic caused some disruptions. These included product, sales or supply chains restrictions, and the restriction in sales of vapour products in 2020 in South Africa in response to COVID-19. Despite these, we are proud of the resilience our teams on the ground have demonstrated to continue delivery. The pandemic also impacted our consumer activation plans in some key markets including Japan, the US and Europe. Even under these challenging circumstances, we continued to deliver against our strategy and grew our New Categories business by 15%. Pilot schemes in emerging markets are ongoing, with initial encouraging results in Pakistan and Indonesia. In Kenya, we have temporarily suspended sales due to local regulatory challenges and continue to engage with the local authorities. In the US, we strengthened our portfolio of modern oral products by the acquisition of certain assets from Dryft, with national rollout continuing in early 2021. We are proud of how much we have already achieved, but there is more to do. We will accelerate our progress to generate a larger proportion of our revenue from products other than cigarettes, in turn reducing the health impact of our business.
With the addition of leading brands in the U.S., following the acquisition of Reynolds American Inc. in July 2017, as well as the growing importance and progress of our reduced-risk*† products, we have established a portfolio of priority brands – our Strategic Portfolio.
This portfolio reflects our priority to provide consumers with new categories of reduced-risk*† products, while recognising the continued importance of our conventional cigarette brands to adult smokers and to our business.
In November 2019, we announced that we are creating three global brands for our New Category product portfolio: Vuse for vapour products; Velo for modern oral products and glo for tobacco heating products. This will further accelerate the growth of our New Category business, creating fewer, stronger and more trusted international brands. We made good progress, but the disruption caused by COVID-19 means we have had to defer those plans until 2021 in a number of markets.
We also have many international and local cigarette brands which, although not part of our Strategic Portfolio, remain popular in many countries in which we operate. These brands include Vogue, Viceroy, Kool, Peter Stuyvesant, Craven A, State Express 555 and Shuang Xi.
* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.
† Our products as sold in the US, including Vuse, Velo, Grizzly, Kodiak, and Camel Snus, are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.