BAT Invests in New Categories Amid Declining Tobacco Sales

British American Tobacco (BAT) is one of the world's largest cigarette suppliers, and with the decline of the tobacco industry, it has doubled its investments in new product categories like e-cigarettes.

The revenue of this London-based publicly traded company has grown in the past few months, despite the fact that the public in Europe and the United States tend to quit smoking.

The COVID-19 pandemic on both sides of the Atlantic has accelerated the shift towards quitting smoking. The bosses of major tobacco companies, known as BAT, now expect global tobacco sales to remain at around 2% for the entire year.

The company stated that they had initially believed that sales would continue to decline, but the resurgence of Covid-19 in emerging markets has resulted in an increase in tobacco sales.

The company stated that the revenue growth for British American Tobacco in the second quarter is between 2% and 4%, as they did not disclose a specific number prior to the upcoming financial update.

The CEO, Jack Bowles, stated that the company will continue investing in its new category as they seek to reduce operational losses.

We anticipate an increase in contributions from all new categories and regions by 2022. We have confidence in achieving our target of £5 billion in revenue and profit by 2025," he stated in a release.

In the US, industry sales are still facing pressure due to sustained macroeconomic factors and the post-Covid normalization of consumer patterns. To offset early signs of accelerated industry price cuts in the second half of the year, we recently initiated a commercial plan across specific brands, channels, and states.

Despite the increasing inflation rate in our supply chain, we anticipate a strong improvement in our adjusted operating profit margin. This will be achieved through robust pricing, the scale of our brand, and increasingly focused marketing investments. By the end of 2022, our three-year Quantum program is expected to save over £1.5 billion in costs annually.

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