Key Takeaways:
- BAT cut its global cigarette volume forecast to a 2.5% decline for 2026.
- New-category revenue growth outlook raised to mid-teens from low double-digit.
- Group revenue expected to rise 3%-5% with adjusted profit growth of 4%-6%.
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British American Tobacco cuts cigarette outlook to 2.5% decline, lifts new-category view
British American Tobacco cut its 2026 global cigarette volume forecast to a 2.5% decline while raising its new-category revenue growth outlook to the mid-teens.
"We are continuing to drive good momentum, and are confident in our ability to sustainably deliver our mid-term algorithm and strong cash returns for shareholders," Chief Executive Officer Tadeu Marroco said.
The London-based maker of Lucky Strike and Dunhill cigarettes now expects group revenue to rise 3% to 5% for 2026, after a 0.9% decline to GBP25.61 billion in 2025. Adjusted profit from operations is forecast to grow 4% to 6%. The new-category segment, which includes Vuse vapes and Velo nicotine pouches, is expected to deliver mid-teens revenue growth for both the first half and full year, up from a prior estimate of low double-digit growth.
The revised outlook reflects the accelerating shift away from traditional cigarettes as regulatory and consumer trends favor smokeless alternatives. The US market, where the FDA recently exercised enforcement discretion on certain unauthorized nicotine products, presents a key opportunity for BAT to roll out new versions of its Vuse and Velo products, according to Reuters.
BAT said the broader macroeconomic and geopolitical backdrop remains dynamic, increasing the risk of volatility in consumer sentiment, though it noted no significant impact on the group at this time. The company's revised forecast of a 2.5% industry volume drop for 2026 compares with its prior estimate of 2%.
The guidance raise signals management's confidence in its transition strategy amid a shrinking traditional market. Investors will watch for further details on US market share gains and new-category margins when BAT reports its half-year results.
This article is for informational purposes only and does not constitute investment advice.
[1] British American Tobacco Cuts Cigarette Outlook But Expects Lift in New-Category Revenue[2] British American Tobacco cuts cigarette outlook but expects lift in new-category revenue[3] British American Tobacco hikes sales growth outlook for smokeless ranges[4] British American Tobacco "firmly" on track to deliver 2026 guidance[5] BAT shares drop as it maintains full-year forecast despite US policy boost
