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# Cigarettes Are Fading. Nicotine Pouches Just Rescued Big Tobacco's Year.
- URL: https://www.businessbagel.com/cigarettes-are-fading-nicotine-pouches-just-rescued-big-tobaccos-year/
- Published: 2026-08-03T03:15:00.000Z
- Updated: 2026-08-03T03:14:59.000Z
- Description: British American Tobacco lifted its profit outlook as booming Velo pouch sales and a strong US run offset shrinking cigarette demand — even as it cuts thousands of jobs.
- Author: Christian Maidman
- Tags: Companies, Business Bagel News

British American Tobacco has a problem every year and a fix that is finally paying off. On Thursday the maker of Lucky Strike and Dunhill cigarettes lifted its annual earnings forecast, as surging demand for its Velo nicotine pouches and a strong United States performance offset a sharp decline in Asia. The company now expects full-year growth in adjusted earnings per share towards the middle of its 5% to 8% range — a step up from its earlier guidance of the lower end.

## Pouches over cigarettes

The engine of that upgrade is what BAT calls its New Categories — vapour, heated products and, above all, nicotine pouches. Revenue there accelerated to 18% growth at constant exchange rates, with modern-oral pouches now the biggest of the group's newer bets. Its share of the pouch market in its top countries climbed 8.4 percentage points to 39.2%. The number of people using its smokeless products has reached 35 million. For the six months to June, adjusted earnings rose 7.9% to 164 pence per share, ahead of the 158.5 pence analysts had expected.

Investors were harder to please. The shares fell as much as 3% on the day, trading around 2.8% lower, as the market weighed a slower recovery in Asia and guidance for revenue and operating profit that BAT held at the lower end of its ranges.

## Betting the business on life beyond the cigarette

The transformation comes with a human cost. BAT is pressing ahead with a sweeping, AI-driven overhaul that will cut about 5,500 jobs and shift roughly 3,500 more roles to outside firms, including the consultancy Accenture — a restructuring that spares only its biggest market, the US. It is also returning cash, with a £1.3 billion share buy-back. And it sees a fresh opening in America, where a regulatory shift could unlock a market the company values at as much as £7 billion.

Chief executive Tadeu Marroco said the first half was “in line with expectations” and that the group is “firmly on track” for its full-year targets. The direction of travel is now unmistakable: BAT is betting its future on everything except the cigarette that built it.