Key Points
- BAT raises smokeless growth outlook;
- New category sales expected to grow mid-teens;
- Global cigarette volumes seen down 2.5%;
- Velo and Vuse continue driving transition.
2Firsts
June 2, 2026
According to Belfast Telegraph, British American Tobacco (BAT) has raised its growth outlook for smokeless products, reflecting the continued shift of consumers away from conventional cigarettes toward alternative nicotine products such as vapes and nicotine pouches.
BAT said sales of its New Category portfolio, which includes vaping products, nicotine pouches and other reduced-risk products, are now expected to achieve “mid-teens” growth, compared with previous guidance for low double-digit growth.
At the same time, the company expects global cigarette industry volumes to decline by around 2.5%, compared with its previous forecast of a 2% decline, highlighting ongoing pressure on traditional tobacco markets.
BAT maintained its annual revenue outlook, stating that full-year revenue growth is expected to remain at the lower end of its 3% to 5% target range. Underlying operating profit growth is also expected to be at the lower end of its medium-term guidance range of 4% to 6%.
The company said profit generation is expected to be weighted toward the second half of the year, supported by stabilizing performance across Asia Pacific, the Middle East and Africa, as well as savings generated through its ongoing cost-reduction program.
BAT added that it is closely monitoring developments in the Middle East. While the company said there is currently no significant impact on operations, it noted that broader macroeconomic and geopolitical uncertainty could affect consumer sentiment if volatility persists.
The company said growth in its smokeless portfolio continues to be driven by its Vuse vaping brand and Velo nicotine pouch brand.
According to BAT, Velo continues to deliver “excellent” revenue growth across global markets.
Chief Executive Officer Tadeu Marroco said:
“The group’s full-year delivery remains firmly on track.”
BAT has spent several years shifting its strategic focus away from conventional cigarettes and toward alternative nicotine products, including vaping products, nicotine pouches and heated tobacco products.
The company has previously stated its ambition to become a “predominantly smokeless” business by 2035.
However, traditional cigarette products still account for the majority of BAT’s revenue.
According to company figures, BAT generated £20.2 billion (approximately US$27.4 billion) in revenue from its cigarette business in 2025, driven by brands such as Lucky Strike, Pall Mall and Dunhill. Revenue from New Category products reached £3.6 billion (approximately US$4.9 billion), representing about 18% of total group revenue.
BAT shares fell around 4% in early trading on June 2 following the update.
Russ Mould, investment director at AJ Bell, said the latest update suggests demand for New Category products, including vaping and heated tobacco products, is continuing to strengthen.
However, he noted that some investors had expected traditional cigarette products to remain a stronger earnings contributor for longer, contributing to a cautious market reaction.
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