BAT reports robust growth and improved profitability in vape category

British American Tobacco (BAT) has reported significant progress in its New Categories segment—comprising vapour, heated products, and modern oral—with strong growth in revenue and profitability during the second half of 2024.

In a trading update on Wednesday, the company said it is on track to deliver its 2024 financial year guidance, with the second-half performance acceleration driven by the phasing of New Categories innovation, the benefits of investment in US commercial actions and the unwind of wholesaler inventory movements.

BAT said its flagship vapour brand, Vuse, maintained its position as the global value share leader, achieving a 40.3 per cent share in key markets. Despite challenges posed by illicit single-use vapour products, particularly in the US and Canada, BAT said its investment in innovation and regulatory advocacy has positioned it well for future gains.

“Our Quality Growth imperative is delivering higher returns on more targeted investments across all three New Categories, and that prioritisation and focus is already transforming our business in Europe,” Tadeu Marroco, chief executive, said.

“We are making further progress increasing profitability across New Categories, and I am particularly pleased with the improvements in Heated Products and Modern Oral.”

BAT reinforced its leadership in the US, where Vuse captured 50.7 per cent value share in tracked channels, benefiting from stronger enforcement against illicit products in states like Louisiana. Globally, Vuse’s share remained stable, reflecting its strong brand equity.

Velo, BAT’s modern oral brand, demonstrated robust growth with its volume share in top markets rising to 28.2 per cent. Enhanced portfolio offerings, including new flavours and nicotine levels under Velo Plus, bolstered its momentum in the US and Europe.

Innovations such as glo Hyper Pro have shown promising results in improving BAT’s share in the heated tobacco market, particularly in Japan and Italy.

The company expects low-single figure organic constant currency revenue growth and low-single figure organic adjusted profit from operations growth in 2024. Marroco highlighted the company’s strategic pivot toward becoming a predominantly smokeless business by 2035, reiterating a commitment to sustainable value creation.

“Building on the strong foundations we have established, I am confident that we will deliver an improved underlying performance as we move from investment to deployment in 2025,” he said.

“We will continue to reward shareholders through strong cash returns, including our progressive dividend and sustainable share buy-back, and we remain committed to returning to our mid-term guidance of 3-5 per cent revenue and mid-single digit adjusted profit from operations growth on an organic constant currency basis by 2026.”