British American Tobacco on Tuesday said it now expects global cigarette industry sales volumes to decline about 2.5% this year, a steeper drop than the roughly 2% decline it had previously forecast. The company, whose brands include Lucky Strike and Kent, cited heightened competition in the U.S. market and slower-than-expected progress in the Asia-Pacific, Middle East, and Africa region as factors weighing on its traditional cigarette business.
At the same time, BAT raised its revenue growth forecast for its new categories portfolio — which includes vaping devices, nicotine pouches, and other non-combustible alternatives — to the mid-teens for 2026, up from a prior forecast of low double-digit growth.
The company’s shares fell 3.2% in early London trading in response to the mixed update.
RBC Capital Markets analyst James Edwardes Jones said in a note that “combustible performance is underwhelming while new categories are performing strongly.”
BAT said it continues to expect full-year revenue growth of 3% to 5% and adjusted profit from operations growth of 4% to 6%, both at the lower end of its medium-term guidance range.
The update underscores the tobacco industry’s ongoing transition as traditional cigarette volumes shrink globally under pressure from regulatory restrictions, health awareness campaigns, and consumer preference shifts, while companies bet on a growing market for smoke-free products.