British American Tobacco is looking at 50 million smokeless customers

British American Tobacco has lifted guidelines on the sale of its smokeless products as demand for the group’s vapes and nicotine care products continues to grow.

The owner of Rothmans and Lucky Strike continues to expect its revenue and adjusted profit from operations to rise by a ‘low single digit’ percentage this year.

Revenues from traditional tobacco products and new categories are also expected to increase in the last six months of 2024 compared to the first half.

The FTSE 100 group said vape brand Vuse has maintained dominance in the world’s top vaping markets such as the UK, Germany and the US.

BAT also noted that its Velo nicotine pouches saw strong volume, sales and profit growth, partly due to the brand launch in Britain and Poland.

However, the company said demand for Vuse and combustibles in the US continues to be impacted by the widespread use of illegal vaping products.

Like other cigarette sellers, BAT is gradually expanding its alternatives in response to increased public awareness of the harms of tobacco.

The goal is for 50 million consumers to use its non-combustible goods, such as vapes and tobacco heaters, by 2030 and generate at least half of its sales from them by 2035.

Tadeu Marroco, CEO of BAT, said: “Our imperative for quality growth is to deliver higher returns on more targeted investments in all three new categories.

“We are making further progress in increasing profitability in new categories, and I am particularly pleased with the improvements in heated products and modern oral products.”

Marroco also said the company expects to have “more clarity on the financial implications” of a lawsuit involving subsidiary Imperial Tobacco Canada (ITCAN) when it reports its full-year results in February.

In October, BAT revealed it had filed a plan in a Canadian court that could potentially end a major lawsuit.

A landmark 2015 court ruling found that ITCAN, Philip Morris and Imperial Tobacco were aware of the health problems associated with smoking but failed to adequately warn their customers.

The three companies were ordered to pay CA$15.6 billion in damages in a case brought by more than a million current and former smokers in Quebec, making it one of the largest class action lawsuits ever in Canada.

British American Tobacco shares were 0.6 percent higher at 2,987p on Wednesday morning, taking their gains this year to around 28 percent.

Richard Hunter, head of markets at Interactive Investor, said: “The group remains committed to achieving higher levels of shareholder returns, including further buyback programs, despite the investments required in the business’s transition.

‘In the shorter term, however, the market consensus is that Imperial Brands remains the favored player in the sector, with BATS remaining at a level, albeit a strong one.’