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British American Tobacco investing heavily in R&D of ‘non-combustible’ alternative products

December 7, 2021


London-based British American Tobacco (BAT) has reported a strong performance in both cigarettes and “non-combustible” products such as Vype, its flagship vapour brand now known as Vuse, as recent reports claim that the tobacco giant is now investing heavily in non-combustible nicotine products.

The giant has doubled its revenues since 2016, as per market reports, and is using its core “combustible” revenue to fund R&D of both the “non-combustible” alternative tobacco products as well as the “future beyond tobacco”.

BAT seeks to make cigarette alternatives profitable by 2025 and is aiming for 50 million users of vaping products by that time.

The tobacco giant is reported to have attracted 1.4 million new users of vapes, heated tobacco products and nicotine pouches in the first quarter of 2021. The company also aims to achieve annual revenues of £5bn from three new products – Vuse vapes, Velo oral nicotine pouches and Glo heated tobacco, by 2025.

As seen in the 2021 half-year report, new categories are driving growth at remarkable rates. The new categories group has grown 50 per cent year to year taking constant rates into account, with the total non-combustible group growing 29 per cent with the constant rates in mind, as per reports.

However, achieving annual revenues of £5bn by 2025 will require significantly higher growth than it achieved last year, when it reported sales in that category of £1.4bn, up 15 per cent year on year.

Earlier this year, BAT released a comprehensive review of the scientific evidence for vaping products, and their potential in Tobacco Harm Reduction and decreasing smoking rates.

Known as third largest tobacco company in the world in terms of market cap, the tobacco giant carries some of the strongest and most recognizable brands in the industry, including six out of the 10 most valuable tobacco brands in 2021.