BAT sees increasing move towards vaping and heated tobacco

More new customers started using British American Tobacco’s vaping, heated tobacco and oral products in the first nine months of this year than all of 2020, the business said on Tuesday.

It had 17.1 million customers for its non-combustible products by the end of September.

The tobacco giant, which is behind brands Lucky Strike and Pall Mall, said it is still making a loss from these new categories – as opposed to its cigarettes – but that for the first time losses are narrowing.

This means they have contributed to growing the business’s profits, helping to put it on track to meet its financial guidance for the year.

Chief executive Jack Bowles said: “Benefiting from a continued strong new category performance, which is now a sizeable contributor to group revenue growth, we are making excellent progress towards our £5 billion revenue target by 2025, supported by a clear focus on THP (tobacco heated products).

“By leveraging our increased scale, new categories will contribute to profit growth for the first time as their losses start to reduce, a key step on our pathway to profitability by 2025.

“We are building strong, fast-growing, global brands of the future, adding another 3.6 million consumers of non-combustible products in the first nine months of the year, more than in all of 2020.”

BAT is growing revenue by more than 5% thanks to its new categories, but its combustibles business – mainly made up of cigarettes – is also growing thanks to high prices.

In the US, sales of combustibles dipped as the industry as a whole is expected to decline by 5.5% in America and remain flat globally due to an increase in Indonesia.

The value that it gained from selling cigarettes increased by 10 basis points, or 0.1%, in the nine months to the end of September.

The business grew its cigarette sales due to increases in Bangladesh and Pakistan.