- Company name
- British American Tobacco
- Sector
- Tobacco
- About
- British American Tobacco makes and sells tobacco and nicotine products around the world. Its cigarette brands include Dunhill, Lucky Strike, Newport, and Camel outside the United States. The company also sells New Category products, such as Vuse vapor devices, glo heated tobacco, and Velo nicotine pouches. Most company profit still comes from cigarette sales, but New Category sales are growing fast.
- Thesis
- The market already prices British American Tobacco close to fair value, because investors trust its brand strength and pricing power in a shrinking cigarette market. The remaining doubt centers on New Categories. Vuse, glo, and Velo must reach full profitability while regulators tighten rules on vapor products and nicotine pouches in the United States and Europe. Velo already earns a profit margin close to cigarette levels in its top markets, and BAT raised its 2026 New Category growth guidance into the mid-teens range. Further sales of BAT's stake in ITC Limited, plus continued debt paydown toward its target leverage range, could remove balance-sheet risk and close the small remaining gap.
- Risks
- BAT raised its 2026 full-year forecast for combustible cigarette volume decline to 2.5%, up from an earlier estimate of 2%. The core cigarette business is shrinking faster than planned.
France banned the manufacture, sale, and import of nicotine pouches starting April 2026, and the EU is drafting new rules that could add flavor limits and new excise taxes on pouches. This threatens Velo, BAT's fastest-growing product line.
US federal agencies seized about 18 million illegal vaping devices worth roughly $175 million by May 2026, yet only a small number of e-cigarette products hold full FDA marketing authorization. Large volumes of unauthorized disposable vapes still compete with Vuse on price.
BAT ended 2025 with adjusted net debt above the midpoint of its target leverage range. Reaching that target by the end of 2026 still depends on further asset sales, such as a pending stake sale in ITC Hotels.
- Recent events
- 2026-07-30: BAT reported half-year 2026 revenue of £12,235 million, up 2.9% at constant currency. New Category revenue grew 18.0%, and adjusted profit from operations grew 2.5% to £5,426 million.
2026-02-11: BAT posted full-year 2025 revenue of £25,610 million. The company raised its dividend 2.0% to 245.04 pence per share, and committed to a £1.3 billion share buyback for 2026.
2025-05-28: BAT sold about 2.5% of its stake in ITC Limited for roughly $1.5 billion, cutting its holding from 25.44% to 22.94%, with proceeds directed toward debt reduction and a higher share buyback.