British American Tobacco Targets Horizon 2030 Growth With Velo, U.S. Turnaround and AI

Key Points

• BAT’s Horizon 2030 strategy targets 3%-5% annual revenue growth, 4%-6% adjusted profit growth and more than £50 billion in free cash flow from 2024 through 2030, supported by £2 billion in planned productivity savings.
• Modern oral nicotine is the main growth engine: BAT expects the category to nearly triple to £11 billion by 2030, with Velo projected to reach £4.3 billion in revenue. Velo has gained leading global and U.S. market shares.
• The U.S. turnaround and AI investments are strengthening the business as U.S. revenue rose 8.5% and new-category revenue increased 60% in the first half of 2026. BAT is also using about 1,000 AI agents while relying on combustibles to continue generating cash during the transition.

British American Tobacco NYSE: BTI used its 2026 Capital Markets Day to outline its Horizon 2030 strategy, emphasizing growth in modern oral nicotine products, a turnaround in the U.S. business, continued cash generation from combustibles and greater use of artificial intelligence across operations.

Chief Executive Tadeu Marroco said the company’s transformation toward smokeless products was gaining momentum. BAT reported that new-category revenue rose 18% in the first half of 2026, while U.S. revenue increased 8.5%. The company said it remains on track with its financial framework of 3%-5% revenue growth, 4%-6% adjusted profit growth and 5%-8% adjusted diluted earnings-per-share growth through 2030.

BAT also reiterated expectations to generate more than £50 billion of free cash flow between 2024 and 2030. Its plan includes £2 billion of productivity savings between 2026 and 2030, alongside £700 million of annualized benefits from its Fit2Win efficiency program by 2028.

Modern oral products take center stage

Marroco described modern oral nicotine as BAT’s principal smokeless growth driver. The company expects global industry revenue in the category to nearly triple to about £11 billion by 2030, from roughly £4 billion currently. BAT expects its Velo brand to outperform the market and generate an estimated £4.3 billion in revenue by 2030.

According to BAT, Velo became the global volume-share leader in modern oral products during the fourth quarter of 2025. The company said it held a 41.4% global share at its latest measurement and that its European volume share of 63.6% was about seven times that of its closest competitor.

In the U.S., BAT said Velo’s national volume share rose from 4.4% in January 2024 to more than 30%, while Velo+ accounted for about 80% of the category’s volume growth. Marroco said the company built local manufacturing and more than 90% weighted distribution within 18 months of launch.

BAT expects the number of modern oral users to double from about 24 million currently by 2030. Anniek Kindts, BAT’s global head of new categories, said the company sees further opportunity in markets where usage remains low and in countries developing specific regulatory frameworks for the category.

U.S. turnaround and vapor opportunity

The U.S. is now a “proof point” for BAT rather than its largest question mark, Marroco said. BAT reported first-half U.S. revenue growth of more than 8%, adjusted profit growth of 10% and new-category revenue growth of 60%.

BAT said Vuse remains the leading legal vapor brand globally and held close to 57% U.S. value share year-to-date. The company estimates the U.S. illicit vapor market is worth around £7 billion and assumes that 30% of illicit market value could return to legal products by 2030, representing a potential £2 billion opportunity.

In vapor, BAT is targeting premium rechargeable products through Vuse Ultra and Vuse Pro One. The company said Vuse Ultra, introduced in five major markets during 2025, had reached about 15% of Vuse revenue in those markets within a year.

For heated products, BAT plans a more selective investment approach. The company said its glo brand remains focused on the affordability segment through glo Hyper while building a premium presence with glo HYLO. BAT expects losses in heated products to begin declining from 2027.

Combustibles remain a cash-generating pillar

BAT executives stressed that cigarettes remain central to funding the company’s transition. Emma Dean, global head of combustibles, said the company expects combustible revenue to grow 1%-2% over the medium term, with category contribution growth above 2%.

The company forecasts that global combustible volumes will decline about 2.5% annually through 2030, but said pricing and mix should allow industry net turnover to continue rising. BAT expects combustibles to account for around 70% of total nicotine-industry value in 2030.

BAT is concentrating investment on 20 markets that represent approximately 80% of industry revenue. Dean said BAT has exited 12 markets since 2023 as part of a simplification effort that contributed to £1.2 billion in group savings between 2023 and 2025.

Marroco said the company does not currently foresee a broad additional market-exit program, but will continue reviewing markets based on returns, risks and potential for growth in nicotine alternatives.

AI, innovation and beyond nicotine

BAT said it has made AI a core operating capability, with about 1,000 AI agents in daily use and AI access available to employees with computers. Javed Iqbal, interim CFO and director of digital and information, said BAT has shifted technology spending toward data, analytics and AI while keeping overall IT spending increases minimal.

The company said AI-supported formulation design can reduce work that previously took three months to about 30 minutes, while its AI patent-research tool cuts search time by more than 90%. BAT also cited AI use in marketing, trade planning and content generation.

BAT and its strategic partners invested about £1 billion in innovation during 2025, according to Zafar Khan, director of operations. The company said it has more than 80 technologies ready for deployment and more than 100 additional technologies under development.

Beyond nicotine, BAT highlighted its Ryde functional shot business and Moment beverage brand. James Barrett, director of business development, said the two businesses have generated more than $45 million in cumulative net revenue since launch and are approaching 65% year-over-year growth. BAT said these activities remain outside its 2030 financial algorithm, while cannabis remains a longer-term option rather than a meaningful near-term contributor.

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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