British American Tobacco (BAT) has announced plans to lay off 2,300 jobs globally by January next year. The job cuts will eliminate four percent of its workforce including a fifth of its senior managers. This decision aims at shifting the company’s profit centre from legacy tobacco products to e-cigarettes and other new categories of products.
The company, whose headquarters is in London, has over 55,000 employees worldwide, with 55 factories in 48 countries. Thus, with an operational presence in many African countries such as Nigeria, Uganda, Kenya, Egypt and South Africa, employees in those subsidiaries may most likely be affected by the downsizing.
BAT said the planned job cuts would help save money that can be reinvested in the growth of its portfolio and deliver on its target of generating $6.2 billion of revenue in “new categories” by 2023-24.
In a statement released by BAT, the company’s new chief executive, Jack Bowles said, “my goal is to oversee a step change in new category growth and significantly simplify our current ways of working and business processes, whilst delivering long-term sustainable returns for our shareholder.”
Companies such as BAT have observed that a bulk of their revenue is being generated from e-cigarettes. This is because the demand for traditional tobacco products continues to decline, especially in western markets, where high taxes, public smoking bans, and health worries have persuaded consumers to turn to controversial alternatives.
In Africa and the Middle East, the e-cigarettes market is forecast to reach $485 million by 2024 growing at a rate of 9.74 percent during the forecast period (2019 – 2024). With the growing popularity of vaping devices, flavour and fragrance vendors are introducing a wide variety of e-liquids to attract consumers.
More so, tobacco manufacturers are focusing on technological developments and innovation, in order to attain an edge over the competitors. This has persuaded vendors to heavily invest in technology.
BAT recently acquired South Africa’s Twisp, arguably the largest multi-channel distributor of vaping products and flavours. The company has almost 70 dedicated outlets nationwide in prime locations, retailer distribution, and a modern e-commerce platform. It has become the go-to destination for adult consumers in search of potentially reduced-risk products in the country.
The announcement to layoff comes a day after U.S. President Donald Trump said that the government would remove all flavoured e-cigarettes from shelves, as officials warned that millions of children had been drawn into nicotine addiction.
With concerns from the Trump-led government, the company plans to undergo a Pre-Market Tobacco Applications (PMTA) for its four main e-cigarettes products in the U.S. under the guidance of the Food and Drug Administration (FDA).