British Tobacco Giant is Reinventing Business, Says Cannabis is the Future

Stephen Andrews
29 Jul 2021

UK's largest tobacco operator targets that by 2025, a significant chunk of its profits comes from nicotine alternatives, including cannabis.

People will always buy cigarette brands such as Dunhill, Kent, Rothmans or Lucky Strike, but the tobacco industry's future is not about selling only traditional cigarettes anymore. For BAT, cannabis seems to be part of the bigger picture.

As BBC reports, BAT said it wanted to "accelerate" its transformation, which will entail reducing the health impact of its products. The firm said cannabis is part of its future as it tries to transform business.

The tobacco behemoth signed a deal with Canadian pot producer  Organigram earlier this year, and it also engaged in a research agreement that will look at an array of cannabis products, mostly CBD-based. In fact, the firm is already testing a new CBD vape product in Manchester.

BAT's chief marketing executive Kingsley Wheaton told Radio 4's Today Programme, when they think of the firm's future, it's "certainly beyond nicotine products." For them, cannabis is interesting "as another wave of future growth," he said.

"I think [CBD vaping] is part of the future, but the present challenge is reduced harm in tobacco and nicotine alternatives, encouraging people to switch," Wheaton said. 

BAT reported an 8.1% increase in revenues to £12.18bn (roughly $17bn) as it released its half-year results at the end of June. 

According to the report, more than a third of BAT's revenues in the UK came from vaping brands such as Velo, Vuse, and glo. 

Vapers are BAT's new top cohort, with users of non-combustible products making a jump from 2.6 million to 16.1 million. 

Despite that, most of BAT's revenues still come from tobacco sales. The firm reported sales of its cigarette products recovered in some developing nations in recent months as countries began to open up after lockdown periods ended. Sales did well in Brazil, Pakistan, and Turkey, which are big markets, although the overall revenue from the firm's cigarette and heated tobacco products fell 3% to £10.5bn ($14.4bn).

BAT is not the first tobacco giant that has announced it's moving towards healthier smoke alternatives. Philip Morris International has previously said it aims to push doing business with less harmful products, including vaping and heated tobacco instead of combustibles. In BAT's case, the shift is towards cannabis. 

BAT is committed to reaching £5bn in revenues from sales of nicotines alternatives by 2025.

Stephen Andrews