British American Tobacco jumps amid soaring demand for cigarette alternatives

British American Tobacco (BAT) has hailed a jump in sales despite the continued pressure on its cigarette business as it saw soaring demand for vaping, e-cigarette and oral nicotine products.

The Lucky Strike and Dunhill owner held firm on its outlook for the year as it reported a better-than-expected rise in sales.

Revenues increased by 8.1% to £12.17 billion for the half-year to June, as it rebounded from a year badly hit by the pandemic and heavy restrictions in countries such as South Africa.

BAT said its “new categories” business, which includes products outside of traditional cigarettes, saw revenues increase 50% to £942 million in the first half.

It said that non-combustible products, such as its Vuse vaping brand and Glo heated tobacco brand, now make almost 12% of total operations.

The firm said it has “great momentum” and is “well on track” to meet its targets of £5 billion in new category revenue by 2025 and 50 million in customers using non-combustibles by 2030.

Jack Bowles, chief executive of BAT, said: “We are building strong, global brands of the future with Vuse, Velo and Glo.

“These are underpinned by industry leading multi-category consumer insights and science, with increasing digitalisation.

“We have invested a further incremental £346 million in the first half, funded by continued value growth from combustibles and expect to reach our £1 billion savings target 12 months early.

“Our rapid growth in new categories is driving significant scale benefits and 2021 is shaping up to be a pivotal year in our journey towards ‘A Better Tomorrow’.”

It comes a day after the World Health Organisation branded e-cigarettes as “harmful” and called for better regulation to prevent young people from taking up vaping products.

Shares in the company were 0.1% lower in early trading.