British American Tobacco (BAT) will cut 2,300 jobs globally by January as it seeks to drive revenues in controversial e-cigarettes.
Chief Executive, Jack Bowles, in a statement on Thursday, said his goal “is to oversee a step change in new category growth and significantly simplify our current ways of working and business processes, whilst delivering long-term sustainable returns for our shareholders.”
Bowles, who became CEO in April, described the job cuts which will affect up to 20 percent in senior roles, as a “vital first move”
The announcement comes a day after the US government said it would soon ban flavoured e-cigarette products to stem a rising tide of youth users following a spate of vaping-linked deaths.
BAT and other tobacco companies are deriving more revenues from e-cigarettes as high taxes, public smoking bans and health worries, especially in Western markets, have lowered demand for traditional tobacco products, with consumers turning to controversial alternatives.
According to Bowles, the jobs cuts, which “that will be difficult for our people, but ultimately it is the right thing for our business” would see BAT “better placed to meet ever-evolving consumer needs and deliver savings that can be reinvested in the growth of its portfolio of new categories such as vapour, tobacco heating products and oral tobacco”.
The company, is understood to be targetting a $6.2 billion in new category revenues by 2024.
BAT, which employs around 55,000 staff worldwide, makes traditional cigarette brands Dunhill, Lucky Strike, Kent and Pall Mall. Other brands that the company markets include Benson & Hedges and Rothmans.
Three years ago, it acquired US peer Reynolds American in a deal worth about $50 billion in a move that specifically targeted the lucrative US market and the fast-growing e-cigarette sector.
E-cigarettes have been available in the US since 2006 and were widely considered a safer alternative to traditional smoking.
But while e-cigarettes do not contain the estimated 7,000 chemical constituents present in traditional cigarettes, a 2018 study prepared for Congress said a number of substances in e-cigarettes have been identified as potentially harmful and the vapour could contain traces of metal.
In addition to the US government’s proposed ban, billionaire, Michael Bloomberg this week announced a $160-million campaign to ban flavoured e-cigarettes in the United States.