British American Tobacco announced on Monday that it will cut 5,500 jobs globally and transfer a further 3,500 roles to partner firms, affecting 9,000 employees—roughly 20 percent of its 47,000-strong workforce. The restructuring, part of the Fit2Win programme launched in 2025, aims to generate £600 million in annualised incremental savings by 2028, with £500 million targeted by 2027. The US market, BAT’s largest, is excluded from the cuts. Shares in London fell as much as 1.8 percent in morning trading, underperforming the FTSE 100.

The overhaul is designed to embed artificial intelligence and digital tools across operations while tightening cost discipline. BAT will deepen partnerships with firms including Accenture and ITC Infotech to outsource functions. Chief Executive Tadeu Marroco said the changes would create a “more agile, cost disciplined and technology enabled” organisation. The pivot comes as the company forecasts a 2.5 percent contraction in global tobacco industry volumes this year, driven by falling demand for traditional cigarettes. BAT also faces rising input costs, stricter regulations, and illicit trade in markets such as Australia and Bangladesh. In January 2026, it closed a factory in South Africa, citing competition from illegal cigarette producers.

Analysts in London described the scale of the reductions as a sign of the times, with AJ Bell’s Russ Mould noting the trend is “worrying for the state of the labour market.” The company is shifting its focus to smoking alternatives—vapes under the Vuse brand and Velo nicotine pouches—but has struggled to keep pace with rival Philip Morris International. US regulators have taken a strict approach to approving new product licences, delaying launches and, according to BAT, enabling an influx of illegal Chinese products that have eroded its market share. In its home market, US tobacco sales have also been pressured as smokers trade down to cheaper brands amid high living costs.

Most of the role changes have already been confirmed with employees, the company said, with remaining consultations proceeding in line with local requirements. The next milestone for investors will be progress toward the £500 million savings target by 2027, alongside any movement on US regulatory approvals for new-category products.