Velo Gives BAT a Profit Lifeline as Cigarette Sales Slip

British American Tobacco said Thursday that it will introduce an artificial-intelligence-based productivity programme that is expected to reduce its workforce. Javed Iqbal, the interim finance chief, said the company will use data analytics and AI tools to simplify and automate its operations, and that staffing levels will be affected, though he would not estimate the scale of the cuts. The announcement accompanied a report of higher annual profit, with growth supported by its nicotine pouch brand.

The company's nicotine pouch brand, Velo, has moved into second place in U.S. market share, trailing only the category leader. That performance helped BAT achieve a double-digit percentage gain in newer-product sales during the second half of the year and lift U.S. revenue by 5.5% in 2025. Executives attribute Velo's rise to its higher nicotine content and competitive pricing strategy. CEO Tadeu Marroco described the U.S. results as very encouraging, adding that Velo has significant room to keep growing.

Velo is one of several newer products BAT is backing heavily, along with its Vuse e-cigarettes and heated tobacco devices. The company expects these lines to help it meet its medium-term financial targets, which call for revenue growth of 3% to 5% and adjusted operating profit growth of 4% to 6% in 2026, with performance likely at the lower end of those ranges. Marroco also said that stricter enforcement against unregulated vaping products has boosted sales of BAT's own licensed devices, but that it will take time for those efforts to reshape a deeply established market.

BAT's share price, which climbed 46% over the past year, changed little in morning trading after initially slipping 2%. Investors appear to be balancing the gains from Velo's growth against the cost of the restructuring programme. The company is shifting its focus toward oral nicotine and other newer categories as traditional cigarette sales soften. For shoppers, this means that Velo's expanding U.S. presence and competitive positioning are likely to continue affecting what is available on store shelves.

For nicotine pouch buyers in Canada and the United States, the main takeaway is a broader array of choices. Velo's success has been built on offering higher nicotine strengths and lower prices than its chief rivals, a formula that has driven its rise in the U.S. market. As BAT pours investment into this product line and similar products, consumers can expect ongoing availability and likely further development of new flavours and formats. The company's push into automation and efficiency does not diminish its commitment to growing this category, which has become a central part of its strategy.