Today, we have a clear corporate purpose – to build by reducing the health impact of our business through offering a greater choice of less risky products for our consumers.
We see new opportunities to capture consumer moments which have, over time, become limited by societal and regulatory shifts, and to satisfy evolving consumer needs and preferences.
We have evolved our strategy to put a sharper focus on our New Categories of products, fuelled by investment from the continued delivery of our traditional tobacco business.
Our strategy is about anticipating and satisfying the ever-evolving consumer: providing pleasure, reducing risk, offering an increasing choice and stimulating the senses of adult consumers worldwide.
We will do this by continuing to be clear that combustible cigarettes pose serious health risks, and that the only way to avoid these risks is not to start or to quit smoking. We encourage those who otherwise continue to smoke, to switch completely to scientifically substantiated, reduced-risk alternatives.
As such, alongside our traditional cigarette products, our broad portfolio of non-combustible products includes potentially reduced-risk alternatives such as vapour products, tobacco heating products and modern oral nicotine pouches, as well as traditional oral products such as snus and moist snuff.
Our ambition is to continue expanding our portfolio with a wider range of enjoyable and less risky products that allow us to capture the consumer moments previously associated with tobacco use, reduce harm and satisfy evolving consumer desires.
Our approach will deliver A Better Tomorrow for our consumers who will have a range of enjoyable and potentially less risky choices for every mood and moment; for society through reducing the overall health and environmental impacts of our business; for our employees by creating a dynamic and purposeful place to work; and for our shareholders by delivering sustainable superior returns.
We are encouraged by and proud of the progress we are making. And we are excited about what the future has in store as we continue to accelerate the transformation of our business.
We’re investing billions in R&D, rolling out new products to new markets and transforming ourselves as part of our purpose to build A Better Tomorrow.
We’ve been on this journey for several years. We set an ambition to satisfy consumer moments in tobacco and beyond back in 2012 and launched our first vapour product not long after. Since then, we have invested significant sums in research and development of New Categories of potentially reduced-risk products, including vapour, tobacco heating and modern oral products.
We have become a multi-category tobacco and nicotine products business with our New Categories embedded into the heart of our company, alongside our cigarette operations.
We continue to be clear that combustible cigarettes pose serious health risks, and that the only way to avoid these risks is not to start or to quit smoking. We encourage those who otherwise continue to smoke to switch completely to scientifically substantiated, reduced-risk alternatives.
To this end, we have more than 1,500 scientists worldwide, who are predominantly focused on developing a pipeline of potentially reduced-risk products. To realise their true potential, we also need to make these products available to adult smokers in as many markets as possible, and we are now rolling them out to countries worldwide. By the end of 2019, our vapour products were available in 27 markets and tobacco heating products in 17, with further expansion planned.
To achieve a step-change in New Categories, we are building new capabilities around the world focused on science, innovation and digital information. Consumer preferences and technology are evolving rapidly, and we are staying ahead of the curve with our digital hubs, the creation of innovation centres and further development of our world-class R&D laboratories.
We are also leveraging the expertise of our external partners and are looking forward to exciting results from our venturing initiative.
The progress we have made gives us confidence to set a clear ambition for our future to have 50 million consumers of our non-combustible products by 2030 and to accelerate the growth of our New Category revenues at a faster rate than our total revenue, reaching £5 billion in 2025.
Building A Better Tomorrow is larger than BAT. Lasting change will only be achieved by a combination of similar commitments from companies like us and the support of regulators, public health bodies, politicians, media and academics.
Our role will be to make available high-quality products that are researched and produced to high standards and promoted responsibly and to encourage those who otherwise continue to smoke to switch completely to scientifically substantiated, reduced-risk alternatives.
As a leading multinational company, sustainability is at the heart of our transformation journey as we build A Better Tomorrow by reducing the health impact of our business.
As a result, we are moving from a business where sustainability has always been important, to one where it is front and centre in all that we do. In today’s complex and challenging world, the policies, principles and programmes that guide how we work are more important than ever.
Just as we are committed to making a step change in our New Categories performance, we are also committed to making a step change in our sustainability ambition.
Supporting our ambition to build A Better Tomorrow, we announced a number of stretching targets in 2020 that we are confident will accelerate our transformation which will benefit all our stakeholders and society, including:
In today’s complex and challenging world, the policies, principles and programmes that guide how we work are more important than ever. With operations and supply chains in many diverse and demanding environments around the world, protecting human rights is particularly important for us.
The United Nations Guiding Principles on Business and Human Rights are an integral part of our own wide-ranging Standards of Business Conduct, which we all sign up to, making a commitment, as individuals, to operate to the highest standards.
We also have extensive checks in place throughout our supply chain and a commitment to work with suppliers if issues around human rights – such as child labour – are raised. Responsible marketing plays an important role in growing our business, and we ensure that ours is only directed at adult consumers. We support retailers with proof-of-age schemes and awareness training and engage with governments and call for minimum age laws if none already exist.
And as the industry changes, we have expanded our guidelines on youth access prevention to cover new category products too.
Making agriculture more sustainable is one of our key aims. As part of the industry-wide Sustainable Tobacco Programme , we’re helping leaf suppliers and our contracted farmers with issues such as water and soil management, use of agrochemicals and preventing child labour. The programme is a good example of the close working relationships we have with those who help us produce and sell our products, and how we work as partners.