British American Tobacco Targets 3%-5% Growth as Smokeless Push Powers Horizon 2030

Key Points

• BAT set ambitious 2030 targets, including 3%-5% annual revenue growth, 4%-6% adjusted operating-profit growth and 5%-8% adjusted diluted EPS growth. New-category products are expected to grow at a mid-teens rate, while contribution margins are targeted to reach at least 30%.
• The company is making smokeless products the centerpiece of its strategy, supported by tobacco-harm-reduction research, broader regulation and expansion across its focus markets. BAT said it expects more than £50 billion in free cash flow from 2024 through 2030 and plans an additional £2 billion in productivity savings.
• The U.S. is a major growth engine: Reynolds plans to invest £2.5 billion through 2030, with Velo+ and Vuse driving momentum in modern oral and vapor categories. BAT also reiterated its commitment to progressive dividends, sustainable buybacks and returning leverage to its 2.0-2.5 times target range.

British American Tobacco NYSE: BTI used its Horizon 2030 Capital Markets Day in Winston-Salem, North Carolina, to outline plans to expand its smokeless portfolio, advocate for tobacco harm reduction regulation and deliver growth, margin expansion and shareholder returns through 2030.

The company said it is targeting annual group revenue growth of 3% to 5%, adjusted profit from operations growth of 4% to 6% and adjusted diluted earnings-per-share growth of 5% to 8%. Chief Operating Officer Johan Vandermeulen said BAT expects to return to the lower end of its profit-growth range in 2026, supported by U.S. performance, mid-teens new-category revenue growth and continued improvement in new-category profitability.

Vandermeulen said BAT expects new categories to generate mid-teens revenue growth through 2030, while combustibles are expected to produce average annual revenue growth of 1% to 2%. The company also expects new-category contribution margins to reach at least 30% by 2030.

BAT said it generated £1.2 billion in productivity savings between 2023 and 2025 and is targeting a further £2 billion by 2030. It expects to produce more than £50 billion of free cash flow from 2024 through 2030, including approximately £8 billion annually through the end of the period, excluding the effect of certain one-off cash outflows.

Science and Regulation Central to Smokeless Strategy

BAT executives emphasized tobacco harm reduction, or THR, as a central component of the group’s sustainable-future strategy. Dani Tower, BAT’s group head of scientific and regulatory affairs, said the company’s scientific framework assesses products through product characterization, consumer exposure and potential population-level effects.

Applying that framework, Tower said BAT has concluded that smokers who completely switch to any of its three smokeless product categories face a lower-risk profile than those who continue smoking. She said BAT’s evidence base included more than 280 peer-reviewed scientific publications in 2026.

Tower pointed to Sweden, New Zealand, the U.K. and Japan as markets where smokeless-product adoption has correlated with declining cigarette consumption or smoking prevalence. She also cited third-party modeling suggesting that more than 100 million premature smoking-related deaths could potentially be avoided by 2060 if harm-reduction approaches were widely adopted.

BAT said misconceptions about nicotine remain a barrier to regulatory change. The company’s latest survey found that roughly half of surveyed policymakers and nearly two-thirds of medical professionals associated nicotine with cancer, according to the presentation.

The company said it has expanded its Omni communication platform, which combines BAT research with external findings on THR. BAT said Omni has been activated in more than 20 markets, while its internal “Ask Omni” artificial-intelligence toolkit is available to 40,000 employees. It is also developing OmniBrain, an AI-based system intended to track communications, create content and measure engagement.

BAT said 70 of its 80 focus markets have at least one legally available new-category product. It said more than 30 countries now regulate Modern Oral products, with an additional seven markets developing regulations covering at least part of the category’s regulatory ecosystem.

Reynolds Highlights U.S. Growth Opportunity

David Waterfield, president and CEO of Reynolds American, described the U.S. as the cornerstone of BAT’s strategy. He said the U.S. nicotine revenue pool is estimated at £42 billion and projected to grow at a 4.3% annual rate from 2025 to 2030.

Reynolds said it will invest £2.5 billion in the U.S. through 2030 to expand capabilities and capacity. The investment is expected to support more than 2,000 direct and indirect U.S. jobs. Reynolds has invested more than $200 million in U.S. manufacturing over the past two years, including capacity for Velo+.

Waterfield said the U.S. new-category revenue pool was estimated at £12 billion in 2025 and could reach £17 billion to £25 billion by 2030. Reynolds said total nicotine share reached 34% year-to-date, up 119 basis points from full-year 2025.

Modern Oral was identified as a principal growth driver. Velo+ volume rose 158% year-to-date, while the brand captured 30% category share, according to Reynolds. The company said Velo is now the No. 2 Modern Oral brand nationally and that the adult consumer base for the brand nearly doubled from 3.4 million to 6.2 million.

Reynolds also launched Velo Max, a larger and higher-moisture pouch format offered in multiple strengths and flavors. It plans phased distribution to nearly 100,000 outlets by early next year.

In vapor, Waterfield said stronger federal and state enforcement against illicit products is benefiting Vuse. The company said Vuse holds more than 56% national share in closed-system vapor and leads in 39 states. Reynolds said it expanded the Vuse lineup with four flavor variants under revised FDA guidance, accompanied by age-verification requirements, purchase limits and adult-only messaging.

On combustibles, Reynolds said first-half volume declined 5.2% year over year, though revenue increased 5%. The company expects combustible revenue growth for full-year 2026, despite inflation-driven downtrading and intensifying competition in discount products.

Regional Plans and Capital Returns

Fred Monteiro, BAT’s regional director for the Americas and Europe, said new categories represented 25% of regional revenue in 2025, up from 17% in 2022. The region aims to lift that share to 50% by 2035. He said Velo holds a 63.6% Modern Oral volume share in the region and Vuse has 32.3% value share in key vapor markets.

Pascale Meulemeester, regional director for Asia Pacific, Middle East and Africa, said the region is pursuing a consumer-centric, volume-led strategy after regulatory and fiscal challenges in Australia and Bangladesh affected 2025 results. She said the region expects to return to volume and top-line growth in 2027 and contribute to BAT’s group growth algorithm in 2028.

BAT said it has reduced gross debt by £5 billion since 2021 and expects to return to its target leverage range of two to 2.5 times by year-end. The company reiterated its commitment to a progressive dividend and sustainable share buybacks, noting that it expects to have repurchased £3.1 billion in shares since 2024 by year-end.

About British American Tobacco (NYSE:BTI)

British American Tobacco p.l.c. NYSE: BTI is a multinational consumer goods company focused on nicotine and tobacco products. Its portfolio includes traditional cigarettes, heated tobacco products, vapor products and modern oral nicotine products, including nicotine pouches. The company markets products under brands such as Dunhill, Kent, Lucky Strike, Pall Mall, Rothmans and Vuse, with additional brands varying by market.

Founded in 1902 through the combination of the Imperial Tobacco Company and the American Tobacco Company, British American Tobacco has developed into an international business serving markets across the Americas, Europe, Africa, the Middle East and Asia-Pacific.

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