People all over the world are now staying away from cigarettes, which is directly impacting the business of tobacco companies. Amidst this falling demand and changing market, the world's leading tobacco company British American Tobacco (BAT) has taken a big decision. The company is going to do a large-scale restructuring of its working methods, under which about 9,000 employees will be laid off globally. This famous cigarette manufacturing company like Dunhill is now changing its strategy. The company's focus is now on new options like vapes and nicotine pouches instead of traditional cigarettes.
According to Bloomberg report, recently an internal notice has been issued within the company. It has been told in this notice that by the end of this year 5,500 posts will be completely abolished. Apart from this, the work of 3,500 other posts will be handed over to outside companies (outsourcing). The company aims to save 600 million pounds (about $793 million) annually by the end of 2028.
This entire exercise is the result of rapid changes taking place in the nicotine market. Today's consumer is moving from traditional cigarettes to smoke-free alternatives. In such a situation, BAT is trying to adapt itself to the market. The company has set an ambitious target that it will generate more than half of its revenue from non-combustible products like vapes (Vuse) or nicotine pouches (Velo). Rival companies like Philip Morris International are also following the same path.
BAT had already predicted that global cigarette industry sales would decline by 2% by 2026. This is the reason why, in view of the decreasing demand for cigarettes, tobacco companies are now investing heavily in products which are considered an alternative for adults who want to quit cigarettes.
This huge cut in jobs is not limited to papers only, but is completely changing the way the company works at the ground level. This is part of a larger change, due to which BAT has already had to close several of its manufacturing units. In January this year, citing the increasing pressure of illegal trade, the company had locked its cigarette factory in South Africa.
Along with this, the company is now increasing its dependence on automation, Artificial Intelligence (AI) data analytics instead of manual work. The company's interim Chief Financial Officer (CFO) Javed Iqbal had made it clear in February itself that the needs of employees will change with the advent of AI. It is expected that by 2027, with the help of this technology, about 500 million pounds can be saved.
In this race to reduce costs, BAT has expanded its partnership with the world's leading IT firm Accenture. Under this, work related to service centers in countries like Britain, Singapore, Costa Rica, Mexico, Poland, Romania, Malaysia is now being handed over to Accenture. At the same time, some operations in Pakistan have also been outsourced to local technology firm Systems Limited.
The company's Chief Executive Officer (CEO) Tadeu Marocco said in a statement that these important changes will impact many of our colleagues. He assured that in this difficult period the company will fully respect the affected employees. They will be given all possible help.
