British American Tobacco Unveils AI-Driven Productivity Strategy Amid Surging Velo Profits

British American Tobacco (BAT) launches an AI-driven productivity plan that may lead to job cuts, while the Velo brand powers a surge in new category profits.

By: AXL Media

Published: Feb 19, 2026, 11:48 AM EST

Source: ESM magazine

AI Transformation and the Fit2Win Initiative

The newly announced AI-driven productivity program is a core component of BAT's broader "Fit2Win" efficiency initiative. This multi-year strategy is designed to simplify the organizational structure and automate repetitive back-office and operational tasks. By integrating advanced data analytics into its supply chain and marketing divisions, BAT aims to achieve approximately £600 million in annualized cost savings by the end of 2028.

Javed Iqbal stated during a call with reporters that while it is "too early to say how much of the workforce would be affected," the program will undoubtedly impact the "size of the organization." BAT currently employs roughly 49,000 people globally across more than 140 markets. The move reflects a wider trend in the consumer goods sector, where legacy companies are utilizing generative AI and machine learning to offset rising operational costs and inflationary pressures.

Velo Nicotine Pouches Drive New Category Revenue

Amid the organizational restructuring, BAT’s "New Categories" division which includes vapor, heated tobacco, and oral nicotine has shown robust momentum. Revenue from these smokeless products reached £3.62 billion in 2025, representing 18.2% of the group’s total revenue. The standout performer was the Velo nicotine pouch, which saw rapid market share gains in the United States, positioning itself as the second-largest brand in the category behind Philip Morris International’s Zyn.

TRANSFORMATIVE ANALYSIS: BAT is successfully navigating a "dual-track" transition: aggressively cutting costs in its traditional combustible business through AI while funneling those savings into high-growth, reduced-risk alternatives. By leveraging competitive pricing and higher nicotine strengths for Velo, BAT is directly challenging the market dominance of Zyn in the U.S. This shift is critical as the company seeks to de-risk its portfolio from the long-term decline of traditional cigarette volumes.