BAT upgrades sales outlook as cigarette alternatives attract record customers

British American Tobacco has hiked its annual sales outlook as it hailed record levels of new customers for its vaping and cigarette alternatives.

The Lucky Strike and Camel maker said it added 1.4 million new customers in the first quarter for what it calls the new categories segment of the market, including brands such as vaping products Vuse and Vype, as well as tobacco-free nicotine pouches Velo.

This took its total customer base for these products to 14.9 million in the first three months of the year.

British American Tobacco (BAT) now expects revenues to jump by more than 5%, at constant currencies, over 2021, against previous guidance for growth of between 3% and 5%.

But the group cautioned that it does not expect a recovery in duty-free sales of cigarettes until 2022, as travel restrictions amid the pandemic continue to weigh on its travel retail revenues.

Jack Bowles, chief executive of BAT, said 2021 will be a “pivotal year for the business” with the group on track to see its new categories business reach profit by 2025.

This will be driven by £5 billion of new categories revenues within the same time frame, with the group continuing to spend heavily on new products in the sector.

Mr Bowles said: “We are accelerating our transformation with increased investment capitalising on our growing momentum in the new categories and a record quarter for consumer acquisition.

“This, together with our strong business performance, is reflected in our upgraded group revenue growth guidance of above 5% for 2021.”

In its first half trading update, it said its traditional cigarette sales were set to be ahead of the wider industry, which is on course for a slump of around 3% in sales by volume.