A Brief Analysis of BAT’s New Tobacco Strategy

Recently, foreign tobacco giants have released their financial reports for the first half or second quarter of 2022. Major companies have focused on the new tobacco(herbal heatsticks) business in their financial reports. New tobacco has ushered in huge growth in the first half of the year. Among them, British American Tobacco (BAT) growth is particularly noticeable.


Profits fall, but new tobacco grows strongly by 45.4%


British American Tobacco announced its financial report for the first half of 2022. The financial report shows that British American Tobacco’s revenue in the first half of this year was 12.87 billion pounds, an increase of about 5.7% from last year’s 12.18 billion pounds, but operating profit fell to 3.68 billion pounds, compared with 4.38 billion pounds in the same period last year. , fell by about 1/4, the decline in profit was mainly due to the Russian-Ukrainian war, the company’s business plan transfer in Russia 957 million pounds of impairment charges.


In the first half of the year, British American Tobacco’s new tobacco(heated tabak) products developed unstoppably and grew rapidly. The total revenue of its three new tobacco products, Vuse, Velo and Glo, increased by 45.4% to 1.283 billion pounds, far ahead of other companies in growth rate. The new tobacco segment accounted for 9.96% of the total revenue.


Vuse e-cigarette US market share surpasses JUUL


Benefiting from the negative public opinion of Juul in the US market, and the fact that some models of Vuse have passed the PMTA application, Vuse’s sales have increased tremendously, soaring 55.2% to 617 million pounds.


The latest analysis of Nielsen data says Vuse’s U.S. market share rose to 39 percent from 37.4 percent in the previous report, while Juul’s fell from 30.7 percent to 29.4 percent. British American Tobacco has launched its new Glo range, HyperX2, this year, and a new consumable range in the HNB category is also experiencing strong growth. The company currently has 20.4 million new tobacco product users, up from 18.3 million at the end of 2021.


Constantly pushing new products, the development of atomized electronic cigarettes and HNB is the most balanced


British American Tobacco has made two-way efforts in atomized electronic cigarettes and HNB, with independent research and development and extension mergers and acquisitions, leading the industry in the process of strategic transformation. Among the four major tobacco giants, British American Tobacco’s atomization and HNB have the most balanced layouts in both directions, and both are in a relatively leading position; in 2021, British American Tobacco’s atomization and heated tobacco(herbal heatsticks supplier) revenue will be 927 million pounds and 853 million pounds, respectively. The company’s revenue accounted for 3.6% and 3.3%, respectively.


British American Tobacco launched the “GlohyperX2″ dedicated heating cigarette device in Japan on July 21. It is planned to be sold nationwide in Japan from early October, and then to be promoted worldwide. Philip Morris’ IQOS has an overwhelming first HNB market share in Japan, followed by British American Tobacco’s Glo.


British American Tobacco will also launch VuseGo, a disposable e-cigarette in Germany. Due to the great success of VuseGo in the UK market, British American Tobacco decided to launch a technologically innovative version of the same model in Germany in early October. British American Tobacco said that VuseGo is a cigarette alternative that can provide consumers with more convenient services and is another milestone for us to meet the diversified needs of consumers. VuseGo will further consolidate our market position in the field of electronic cigarettes .


In general, tobacco giants represented by British American Tobacco have a clear strategy for transforming into new types of tobacco, leading the development direction of the global market. Philip Morris International has proposed the “smoke-free future” strategic goal of completely replacing traditional cigarettes with new types of tobacco, focusing on the development of HNB, while British American Tobacco has a balanced layout in the two directions of atomized electronic cigarettes and HNB.


Under the Global Framework Convention on Tobacco Control, the global traditional cigarette market is currently declining at an average annual rate of 3%. New tobacco products have become the key development direction of the international tobacco industry, and this trend will not change in the future. The competition in this field is fierce, but the potential is also huge. If giant companies want to continue to capture more territory, they must continue to increase investment in research and development in the future, and they must also transform and change in all aspects such as supply chain, operation, and commercialization. , with the expansion of the new tobacco market.