Experts say the world's biggest tobacco companies' aim to be a “smoke-free” business amid stricter rules and changing opinions on smoking is “in focus”.
The problems facing the industry will come to the fore when British American Tobacco (BAT), which is listed on London's FTSE 100 index, publishes its half-year financial results on Tuesday.
For several years, BAT has been shifting its focus from cigarettes to newer products, such as vaporizers and nicotine pouches, to adapt to the changing market.
This has led the company to say it aims to be a “predominantly smokeless” business by 2035.
Despite this, smokeless products accounted for around 18% of the group's total revenue last year, with the remainder coming mainly from cigarette brands such as Lucky Strike, Pall Mall and Dunhill.
Sales from its cigarette business amounted to £20.2bn during the year, while it earned £3.6bn from so-called new category products, including the Vuse vape brand and the Velo nicotine pouch.
However, BAT says it is gaining millions more customers each year for its smokeless brands.
The company said earlier this year that it expected total revenue to rise between 3% and 5% in 2026, with products in new categories seeing double-digit growth, and investors would be watching for any guidance updates on Tuesday.
Richard Hunter, head of markets at Interactive Investor, said: “BAT continues to position itself to reflect the changing landscape of smokeless products, while navigating an increasing number of obstacles.
“The pressure on traditional tobacco products has been evident for some considerable time, driven by both changing lifestyle habits and increased regulation.
“There have been several cases where governments have toughened their stance on tobacco sales, especially to young people, adding to the burden of regulatory censorship that has hit the sector in recent years.
“In addition, and quite apart from this general decline in sales of traditional tobacco products as health issues come to the fore, there is a reluctance among some investors to invest in the sector for ethical reasons.”
Hunter said the issues are “in the focus” of investors who will be looking for further progress in the group's transition.
