Our Future Ambitions

Global stakeholder needs

• A global regulatory framework that supports both tobacco control and THR as part of their public health strategy on tobacco and nicotine
• Accurate communication from public health and regulatory authorities on the risk profile of Smokeless Products relative to smoking
• Accurate communication from public health and regulatory authorities on the risk profile of nicotine
• All markets around the world make Smokeless Products available
• A global regulatory framework that is aligned with the pace of innovation in Smokeless Products
   

Progress has been evident from the first decade of our transformation, in terms of transitioning a significant portion of our legacy cigarette business to our Smokeless Products business. Today, Smokeless Products account for more than 16.5% of our total revenues. This part of our business became profitable in 2023, two years ahead of schedule. Additionally, in 25 of our 82 global Smokeless Products markets, >30% of the total revenues in those markets are from Smokeless Products, demonstrating the THR penetration within those markets.

Our Smokeless Products’ contribution to global THR is significant. We have the second largest number of Smokeless Product adult consumers, demonstrating that our multi-category portfolio approach is actively encouraging adult smokers who would otherwise continue to smoke to switch (Figure 1).

Our decade of transformation:

Beyond Nicotine

Alongside our Tobacco Harm Reduction strategy, our future growth accelerator, Beyond Nicotine, was launched in 2021. With Beyond Nicotine we will build a pathway to a new portfolio of non-nicotinebased products that can enhance BAT's future growth. We have clear internal goals but also global stakeholder needs that are essential to our ambition:

Internal goals

• Create a second engine of innovation in Beyond Nicotine
• Create a global science and innovation ecosystem that enables the creation of a consumer-inspired product portfolio
• Creation of a science programme to understand critical principles of safety, quality and efficacy of our new Beyond Nicotine innovations
  
  

Our Beyond Nicotine growth accelerator is key to our transformation to become a high-growth, global consumer goods company. We aim to provide even more choice in new and exciting areas of product innovation and meet the evolving needs of adult consumers, through exploring opportunities beyond nicotine, such as 'Wellbeing & Stimulation'.

Our global wellbeing brand 'Ryde' focuses on promoting both wellbeing and stimulation. This range of bioactivebased products is designed to be used by adult consumers throughout the day for specific moments, to improve focus, to boost energy or to relax. To ensure these products are scientifically substantiated in terms of the benefits they provide, we created Ryplenish™ – a scientifically assessed formula designed to deliver the mood state as per the product claim.

We are assessing the market potential of Ryde with pilot tests in Australia, Canada, and the U.S. Early data suggests that there is significant commercial and consumer relevance with Ryde.

We are in the initial phases of our Beyond Nicotine journey and are making significant investments in a global science and innovation ecosystem. This will enable us to leverage our strengths, as well as to develop new ones, in order to better meet the needs of the consumers of tomorrow.

Moving forward

We are making significant progress on transitioning our business from cigarettes to Smokeless Products, driving our ambition of reducing the health impact of our business via Tobacco Harm Reduction.

Looking to the future

To accelerate the next phase of our transformation, we are committing to Building a Smokeless World - sustainably, responsibly and with integrity. We will continue to engage and collaborate with a broad range of stakeholders on the public health opportunity presented by Tobacco Harm Reduction while we invest in the science and the right multi-category portfolio to actively encourage smokers to switch to Smokeless Products. In turn, this will realise the multi-stakeholder benefits of A Better Tomorrow™.

Table 1. Enterprise metrics for our transition