British American Tobacco Launches AI Cost Reduction Plan: 5,500 Employees to Be Laid Off and 3,500 Positions to Be Transferred

British American Tobacco has announced that it plans to reduce its workforce by approximately 20% through layoffs and job transfers. This tobacco giant is continuing to implement a transformation plan driven by artificial intelligence (AI) to cut costs, increase profits, and address regulatory challenges and delays in new product launches.

Reuters reported that British American Tobacco said on Monday (June 29th) that it would cut 5,500 jobs and transfer another 3,500 positions to third-party companies such as Accenture, affecting a total of 9,000 employees. This reorganization does not include the company's largest market, the United States.

British American Tobacco produces brands such as Lucky Strike and Dunhill. The company expects that this cost reduction plan will generate an additional savings of 600 million pounds (approximately 1 billion Singapore dollars) per year by 2028; previously, the company had set a target of saving 500 million pounds by 2027.

In the largest market for British American Tobacco, the United States, the launch of new nicotine products is restricted by regulatory requirements. New products such as Vuse e-cigarettes and Velo nicotine pouches must obtain regulatory approval before they can be sold. The lengthy approval process has led to delays in product launches and has also limited sales growth.

British American Tobacco said in February that the new productivity improvement plan might lead to layoffs. The company said on Monday that most of the job adjustments have been confirmed to the employees, and the remaining negotiations will be conducted in accordance with local regulations.