BAT logothe earth as seen from space

Building a Smokeless World

Combined Annual and Sustainability Summary 2023
Scroll to our 2023 overview

Chief Executive’s Review 

Building a Smokeless World

For BAT, A Better Tomorrow™ is very clear. We will work to Build a Smokeless World. The way we will do this is by switching as many smokers as we can to our smokeless products.

a man in a suit and tie

Chair's Introduction

Transformation in Action

Our strategy and purpose were discussed extensively during 2023. The result of these discussions was the decision to provide greater clarity on what we mean by A Better Tomorrow™. It means we are committed to Building a Smokeless World.

a man in a suit and tie

Interim Finance Director's Overview

Despite the U.S. impairment negatively impacting our reported results, the Group's operational financial performance demonstrates the resilience of the business. We are highly cash generative and remain committed to our capital allocation framework.

a man in a suit and tie

Our year in numbers

an icon of a down arrow
Download PDF

Our Performance Metrics

Number of Non-Combustible Product Consumers1

0m
XXX%

Cigarette and HP volume share growth (bps)

-0bps
XXX%

Cigarette and HP value share growth (bps)

-0 bps
2022: flat
2021: +20 bps

Vapour (mn 10ml units/pods)

0
7%

HP (bn sticks)

0
2022: 24
2021:19

Cigarettes (bn sticks)

0
2022: 605
2021: 637

(Loss)/Profit from Operations (£m)

-0
-250%

Revenue (£m)

0
2022: 27,655
2021: 25,684

Revenue from New Categories (£m)

0
2022: 2,894
2021: 2,054

Scope 1 and 2 (market-based) CO2e emissions(thousand tonnes)@◆@

0
2.8%

% female representation in Management roles@◆@

0
2022: 41
2021: 39

% reduction in waste generated

0
2022: 21.5
2021: 14.1

Notes:
1. Compared to a 2020 baseline. Our near-term 2030 science-based targets comprise 50% reduction in Scope 1 and 2 and 50% reduction in Scope 3 GHG emissions. Scope 3 emissions target includes purchased goods and services, upstream transportation and distribution, use of sold products and end-of-life treatment of sold products, which collectively comprised >90% of Scope 3 emissions in 2020.
◆ 2023 (2022 for Scope 3) metrics with independent limited assurance by KPMG in accordance with ISAE (UK) 3000; see page 119 of the Annual Report and Form20-F 2023 for a full list of assured metrics.
@ Environmental and health and safety data is reported for the period 1 December 2022 to 30 November 2023. See page 115 for CO2e emissions reporting methodology.

A refined purpose:

The best choice any adult smoker can make will always be quitting combustible tobacco products completely.

For the last few years, our aim has been to build A Better Tomorrow™. This has meant working to reduce the health impact of our business by offering 
adult consumers a greater choice 
of enjoyable and reduced-risk*† products compared to cigarettes.

Now is the time to take a step forward.

Notes:
* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products, including Velo, Grizzly, Kodiak, and Camel Snus, which are sold in the U.S., are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.

A Better Tomorrow™ means Building a Smokeless World.
A smokeless world built on smokeless products where, ultimately, cigarettes have become a thing of the past.
A world where smokers have migrated from cigarettes to smokeless alternatives.
A world where Tobacco Harm Reduction is both accepted and understood.
A world where smokers make a switch to the better. 


Our Refined Strategy

To accelerate the next phase of our transformation, we are committing to ‘Building a Smokeless World’. This means we will deploy our global multi-category portfolio to actively encourage smokers to switch to smokeless products – in nicotine and beyond.

Our Multi-Category Portfolio

BAT is a consumer-focussed business operating internationally. Our multi-category approach means we are well placed to provide adult consumers with products designed for every mood and moment. Our portfolio reflects our commitment to meeting the evolving and varied needs of today’s adult consumers.

Our Global Business

Our regional profile maximises opportunities for quality growth in our sector. Each of our markets is accountable for its own performance and driving growth.

Our in-depth marketplace analysis delivers insights on consumer trends and segmentation, which facilitates our geographic brand prioritisation across our regions and markets.

Consumer preferences and technology are evolving rapidly, and we are staying ahead of the curve with our digital hubs and innovation centres. We are also leveraging the expertise of our external partners and are looking forward to exciting results from our venturing initiative, Btomorrow Ventures.

Our Three Complementary Regions
Map is accurate as at 31 December 2023 and is representative of general geographic regions and does not suggest that the Group operates in each country of every region. Select a region to learn more

Select a region to learn more

a world map

Map is accurate as at 31 Dec 2022 and is representative of general geographic regions and does not suggest that the Group operates in each country of every region.

Revenue by Region
Hover over graph to reveal
£0m
Total revenue
Revenue by Product Category
Hover over graph to reveal
£0m
Total revenue

Our business is divided into three complementary regions, with a balanced presence in both high-growth emerging markets and highly profitable developed markets.

an icon of a flag
0

regions

an icon of a bag
0

major product
categories

an icon of two people
0

employee
nationalities

an icon of a star
0+

employees

Our Business Model

As a global business, we strive to understand our diverse consumers, develop products to satisfy their preferences and ultimately distribute them to markets around the world.

Taking into account feedback from stakeholders also enables us to refine our strategy, deliver sustainable value and build A Better Tomorrow™.

business model diagram

A Better Tomorrow for:

an icon of two people
Consumers
an icon of a person and a globe
Society
an icon of a star
Employees
an icon of a document
Shareholders and investors

As one of the most long-standing and established tobacco and nicotine businesses in the world, we have a unique view of the consumer across our product categories. This is increasingly driven by powerful data and analytics. These insights ensure that the development and responsible marketing of our products are fit to satisfy consumer preferences.

Powered by our data-driven consumer insight platform, we focus on product categories and consumer segments across our global business that have the best potential for long-term sustainable growth.

Link to Principal Risks
Tobacco, New Categories and other regulation interrupts growth strategy; Inability to develop, commercialise and deliver the New Categories strategy; Climate change and circular economy; Cyber security

World-class science is required to substantiate the quality, product safety and reduced-risk potential of our New Category products. This is crucial for building consumer and regulators' trust and encouraging adult smokers to completely switch to less risky alternatives*†.

We have an extensive scientific research programme in a broad spectrum of scientific fields, including molecular biology, toxicology and chemistry. We are transparent about our science and publish details of our research programmes on our dedicated website, www.batscience.com, and the results of our studies in peer-reviewed journals.

Link to Principal Risks
Competition from illicit trade; Tobacco, New Categories and other regulation interrupts growth strategy; Significant increases or structural changes in tobacco, nicotine and New Categories related taxes; Inability to develop, commercialise and deliver the New Categories strategy

As consumer preferences and technology rapidly evolve, we rely on our growing global network of digital hubs, innovation hubs, world-class R&D laboratories, external partnerships and our corporate venturing initiative, Btomorrow Ventures.

Driving sustainable growth is at the core of our innovation. We make significant investments in research and development to deliver innovations that satisfy or anticipate consumer preferences and generate growth for the business.

Led by our strength in developing consumer insights, each innovation helps us on our journey to build A Better Tomorrow™ by reducing the health impact of our business

Link to Principal Risks
Inability to develop, commercialise and deliver the New Categories strategy; Climate change and circular economy; Cyber security

The majority of our tobacco is sourced by BAT Group's vertically integrated Leaf Operations through direct contracts with c.91,000 farmers. The majority of the remainder is from third-party suppliers that, in turn, contract with an estimated 155,000 farmers. The vast majority of tobacco farms in our supply chain are smallholder family farms.

Beyond tobacco, we source product materials like paper and filters for cigarettes and, for our New Category products, we have a growing supply chain in consumer electronics and e-liquids. We also have a vast number of suppliers of indirect goods and services that are not related to our products, such as for IT services and facilities management.

Link to Principal Risks
Geopolitical tensions; Supply chain disruption; Inability to develop, commercialise and deliver the New Categories strategy; Injury, illness or death in the workplace; Solvency and liquidity; Foreign exchange rate exposures; Climate change and circular economy; Cyber security

We manufacture high-quality products in facilities all over the world. We also ensure that these products and the tobacco leaf we purchase are optimised for distribution and sale.

Our New Category products are manufactured in a mix of our own and third-party factories. We work to ensure that our costs are globally competitive and that we use our resources as effectively as possible.

Link to Principal Risks
Geopolitical tensions; Supply chain disruption; Disputed taxes, interest and penalties; Injury, illness or death in the workplace; Solvency and liquidity; Foreign exchange rate exposures; Climate change and circular economy

By applying modern technologies, including AI and machine learning, we ensure our products are where they are needed when they are needed.

Our products are sold around the world and distributed effectively and efficiently using a variety of distribution models suited to local circumstances and conditions.

These distribution models include retailers, supplied through our direct distribution capability or exclusive distributors, and our Direct-to-Consumer business – which has been accelerated through the deployment of owned e-commerce sites.

Link to Principal Risks
Geopolitical tensions; Tobacco, New Categories and other regulation interrupts growth strategy; Supply chain disruption; Inability to develop, commercialise and deliver the New Categories strategy; Foreign exchange rate exposures; Climate change and circular economy; Cyber security

Tobacco and nicotine products should be marketed responsibly to adults only and not designed to appeal to the underage.

Through a globally responsible approach to marketing, we seek to help raise standards and prevent under-age access, while growing our market share by encouraging adult consumers to choose our products over those of our competitors.

Our International Marketing Principles (IMP) govern our marketing across all our tobacco, nicotine and nicotine-free products and brands. They include strict requirements to be responsible, accurate and targeted at adult consumers only. Our IMP are applied even when they are stricter than local laws.

Link to Principal Risks
Competition from illicit trade; Tobacco, New Categories and other regulation interrupts growth strategy; Inability to develop, commercialise and deliver the New Categories strategy; Litigation; Foreign exchange rate exposures

We have a powerful brand portfolio that we are very proud of. This includes our combustibles portfolio and our portfolio of smokeless product brands which will contribute to Building a Smokeless World.

Our global brands are well positioned, with leading-edge insights, science and innovation behind our product pipeline.

We offer adult consumers a range of products, including combustible products, Vapour, Modern Oral and Heated Products, in markets around the world. Our range of high-quality products covers all segments, from value-for-money to premium.

Link to Principal Risks
Competition from illicit trade; Geopolitical tensions; Tobacco, New Categories and other regulation interrupts growth strategy; Supply Chain disruption; Litigation; Significant increases or structural changes in tobacco, nicotine and New Categories related taxes; Inability to develop, commercialise and deliver the New Categories strategy; Disputed taxes interest and penalties; Foreign exchange rate exposures; Climate change and circular economy

1. indicating that consumers, who switched completely to Velo or to glo, had better results for several biomarkers linked to early developmental processes of smoking-related diseases compared with smokers.

† Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products, including Velo, Grizzly, Kodiak, and Camel Snus, which are sold in the U.S., are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.

* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.