British American Tobacco (BAT) has raised its growth expectations for its smoke-free products business after strong demand for nicotine pouches and vaping products helped grow sales.
The tobacco giant said in a statement on Tuesday that it now expects mid-teens growth in new category revenue for both the 2026 first half and full year of 2026, up from its previous guidance of low double-digit growth.
This comes as consumers increasingly turn to products such as Velo nicotine pouches and Vuse vaping devices, while traditional cigarette volumes continue to decline globally.
CEO Tadeu Marroco said the company remains on track to meet its full-year targets.
“I am pleased that our full-year delivery remains firmly on track. We are continuing to drive good momentum and are confident in our ability to sustainably deliver our mid-term algorithm and strong cash returns for shareholders.”
BAT said Velo continued to perform strongly across its markets, helping the company extend its leadership position in the fast-growing Modern Oral category. The group reported gains in volume share and said Velo Plus was delivering “excellent results” in the US.
In new categories, revenue growth is accelerating, and we now expect to deliver mid-teens for 2026. We continue to prioritise investment in our most profitable value pools, driving strong contribution growth
— Tadeu Marroco, British American Tobacco CEO
Marroco said the category was becoming an increasingly important growth driver for the business.
“Velo continues its excellent performance across all three regions. We further extended our global category volume share leadership in Modern Oral, the fastest-growing new category with the lowest risk profile relative to cigarettes.”
The group also reported improving momentum in vapour products. Vuse increased its share in key markets, supported by strong performance in the US, which BAT described as the world’s largest vapour market.
“In Vapour, I am encouraged by improving performance in the US, the world’s largest vapour market, while continuing to build a premium segment with Vuse Ultra in other key markets,” said the CEO.
Growth in new categories helped offset pressure from declining cigarette volumes. BAT now expects global cigarette industry volumes to fall by about 2.5% this year, compared with its earlier forecast of a 2% decline.
The US remained the group’s strongest market, with revenue and profit growth driven by combustibles, nicotine pouches and vapour products. BAT said it expects performance in the market to be stronger in the first half of the year.
Marroco said the company was continuing to focus investment on its smoke-free portfolio.
“In new categories, revenue growth is accelerating, and we now expect to deliver mid-teens for 2026. We continue to prioritise investment in our most profitable value pools, driving strong contribution growth.”
BAT maintained its full-year guidance and said it remains on track to reduce debt to its target range by year-end while continuing shareholder returns, including a planned £1.3bn share buyback programme.
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