British American Tobacco (BATS) investor relations material

Strategic transformation and industry outlook

• Aims to become predominantly smokeless by 2035, leveraging a global multi-category portfolio and leading brands such as Velo, Vuse, and glo.

• Expects nicotine industry revenue in addressable markets to grow at 4% CAGR over five years, with New Category revenue projected at 13% CAGR from 2025 to 2030, driven by double-digit growth in new categories and resilient growth in combustibles.

• Nicotine pouches are the fastest-growing new category, projected to nearly triple in industry revenue by 2030, with Velo achieving global leadership and rapid expansion in Europe and the U.S.

• Poly-use among consumers has doubled in five years, with new category poly-use up fivefold, driving 80% of new category revenue growth.

• Focuses on unlocking white space opportunities in major markets through regulatory engagement and innovation, as significant white space remains in markets where new categories are not yet accessible.

Innovation, science, and core capabilities

• Invested heavily in science, R&D, and digital capabilities, with over 270 peer-reviewed studies, 9,400 patents, and a global science network supporting reduced-risk products.

• Four innovation centers and partnerships with BYD, Smoore, and others accelerate product development, pipeline, and manufacturing agility.

• Launched Omni in 2024 as a compendium of scientific evidence to support harm reduction and regulatory engagement.

• Digital and AI capabilities enhance consumer insights, commercial execution, and operational agility, with digital tools and connected consumer experiences improving engagement.

• Six core capabilities drive transformation: cross-category insights, world-class science, unique R&D, global distribution, regulatory engagement, and digital excellence.

Category performance and financial delivery

• Velo, Vuse, and glo are driving growth in modern oral, vapor, and heated products, with Velo achieving 24% U.S. volume share and 290% volume growth year-on-year.

• Vuse leads the legal U.S. vapor market with nearly 52% value share, benefiting from increased enforcement against illegal disposables.

• Combustibles remain highly profitable, funding transformation, with robust pricing and mix offsetting volume declines.

• U.S. nicotine revenue pool estimated at £42 billion in 2025, projected to grow above 4% CAGR through 2030, with Reynolds delivering 5.5% revenue and 5.9% profit growth in 2025.

• Confident in delivering sustainable financial returns, targeting 3-5% revenue growth, 4-6% adjusted profit growth mid-term, >£50bn cash generation (2024-2030), progressive dividends, and a £1.3bn share buyback for 2026.