British American Tobacco (BATS) CMD 2026 summary

Strategic direction and transformation

• Horizon 2030 strategy targets a predominantly smokeless business by 2035, anchored in Modern Oral, Vapour, and Heated Products, with a focus on consumer-led innovation, digital transformation, and sustainability.

• Modern Oral (Velo) is positioned as the fastest-growing brand in the fastest-growing category, aiming to double the consumer base and triple industry revenue by 2030, with Velo holding 40% global volume share and 69% value share in Europe.

• U.S. market is a cornerstone, with significant turnaround and growth in new categories, especially Modern Oral and vapor, supported by disciplined investment, regulatory engagement, and a balanced regulatory environment.

• Digital and AI capabilities are deeply embedded and being scaled, driving innovation, consumer insights, and operational efficiency across R&D, marketing, and supply chain, including partnerships with Microsoft and Accenture.

• Beyond Nicotine initiatives are progressing, focusing on wellbeing, stimulation, and cannabis, with £256m ARR in cannabis and £20m ARR in W&S, and early-stage ecosystem development.

Financial guidance and performance

• Group targets sustainable growth: 3%-5% revenue, 4%-6% adjusted profit, and 5%-8% adjusted diluted EPS through 2030, with >£50bn free cash flow expected between 2024 and 2030.

• Over £2bn productivity savings targeted for 2026-2030, with annualized Fit2Win benefits of £700m by 2028.

• Modern Oral revenue projected to reach £4.3bn by 2030, with category contribution margin at least 30%.

• New Categories to deliver mid-teens revenue growth, with Modern Oral as the main driver, and vapor growth supported by U.S. enforcement against illicit products.

• Combustibles expected to deliver 1%-2% revenue growth and remain a vital cash engine, funding transformation and shareholder returns.

Regional and category execution

• U.S. business has returned to growth, with Velo+ reaching over 30% volume share and Vuse holding more than 56% market share in closed systems.

• AME and APMEA regions leverage multi-category models, with new categories now 25% of revenue in AME and a clear ambition to reach 50% by 2035.

• APMEA is pivoting to consumer-centric, volume-led growth, focusing on priority markets and multi-category execution.

• Innovation ecosystem strengthened through strategic partnerships (BYD, Smoore), modular technology platforms, and accelerated time to market by 30%.

• Regulatory and corporate affairs focus on evidence-based, proportionate regulation, with OMNI as a central platform for science, advocacy, and stakeholder engagement.