Declining cigarette consumption and changing consumer preferences are reshaping the global tobacco industry. In response, British American Tobacco (BAT) has announced a major restructuring plan that will result in around 9,000 job cuts worldwide.

The maker of popular cigarette brands such as Dunhill is shifting its focus from traditional tobacco products to smoke-free alternatives, including vapes and nicotine pouches, as demand for conventional cigarettes continues to decline.

9,000 Jobs to Be Affected

According to a Bloomberg report, an internal company notice outlines plans to eliminate 5,500 positions by the end of this year. In addition, 3,500 roles will be outsourced as part of BAT's global restructuring strategy.

The company expects these measures to generate annual cost savings of £600 million (around $793 million) by the end of 2028.

Shift Towards Smoke-Free Products

BAT says the restructuring reflects rapid changes in the nicotine market, where more consumers are choosing alternatives to traditional cigarettes.

The company is investing heavily in products such as:

• Vuse vaping devices

• Velo nicotine pouches

BAT aims to generate more than half of its revenue from non-combustible products in the coming years. Other major tobacco companies, including Philip Morris International, are also expanding their smoke-free product portfolios.

The company has previously projected that global cigarette sales could decline by around 2% in 2026, reinforcing the need to diversify beyond conventional tobacco products.

Factory Closures and Greater Use of AI

The restructuring extends beyond workforce reductions.

Earlier this year, BAT shut down its cigarette manufacturing plant in South Africa, citing increasing pressure from the illegal tobacco trade.

The company is also accelerating the adoption of:

• Artificial intelligence (AI)

• Automation

• Data analytics

BAT's interim Chief Financial Officer, Javed Iqbal, has said that the growing use of AI will reshape workforce requirements and is expected to deliver around £500 million in savings by 2027.

Outsourcing Operations Across Multiple Countries

As part of its cost-cutting strategy, BAT is expanding its partnership with global technology company Accenture.

Several service centre operations in countries including:

• United Kingdom

• Singapore

• Costa Rica

• Mexico

• Poland

• Romania

• Malaysia

are being transferred to Accenture. In Pakistan, some operations have also been outsourced to local technology firm Systems Limited.

Company Assures Support for Affected Employees

BAT Chief Executive Officer Tadeu Marroco acknowledged that the restructuring would have a significant impact on employees worldwide.

In a company statement, he said the organization remains committed to treating affected employees with respect and providing appropriate support throughout the transition.

The restructuring highlights the broader transformation underway in the global tobacco industry, as manufacturers adapt to changing consumer preferences, stricter regulations, and growing demand for smoke-free nicotine products.