British American Tobacco (BATS.L) faces growing scrutiny over its ambitious plan to become a predominantly smokeless Business by 2035.
The company, listed on London’s FTSE 100 index, will publish its half-year financial results on Tuesday, bringing industry challenges into sharp focus.
BAT has spent several years shifting its strategy away from cigarettes and towards newer products such as vapes and nicotine pouches.
Despite that pivot, smokeless products accounted for only around 18% of the group’s total revenues last year.
The remaining majority of revenues came primarily from cigarette brands including Lucky Strike, Pall Mall and Dunhill.
Sales from BAT’s cigarettes business totalled £20.2 billion for the year, a figure that dwarfs its newer product lines.
The company generated £3.6 billion from so-called new category products, which includes vape brand Vuse and nicotine pouch Velo.
BAT has stated it is attracting millions of new customers each year for its smokeless brands, signalling continued momentum in that segment.
At the start of the year, the company forecast total revenue growth of between 3% and 5% in 2026, with new category products expected to deliver double-digit growth.
Investors will be watching closely on Tuesday for any updates to that guidance as pressure mounts on the group to demonstrate real progress.
Richard Hunter, head of markets for Interactive Investor, said: “BAT is continuing to position itself to reflect the changing landscape of smokeless products, while navigating an ever-growing number of hurdles.”
Hunter noted that traditional tobacco has faced sustained headwinds, driven by shifting lifestyle habits and tightening regulation across multiple markets.
He said: “There have been several instances of governments toughening their stance on tobacco sales, especially to youngsters, which adds to the burden of regulatory censure which has plagued the sector over recent years.”
Hunter also pointed to a separate challenge, with some investors unwilling to back the sector on ethical grounds regardless of broader business performance.
He said: “There is a reluctance among some investors to invest in the sector at all on ethical grounds.”
Hunter described the issues as being in “sharp focus” for investors who will be looking for more progress on the group’s transition toward smokeless products.