British American Tobacco p.l.c. (BTI): Business Model Canvas [Dec-2025 Updated]

You're looking at the Business Model Canvas for British American Tobacco p.l.c., and honestly, it's a masterclass in managing a cash cow while funding a massive pivot. This model is built on extracting serious money-combustibles still drive over 80% of 2024 revenue-to fuel the growth of New Categories, which already made up 18.2% of H1 2025 sales. The whole operation depends on maintaining that strong core, targeting over 90% operating cash flow conversion in 2025, all while executing a £1.2 billion cost-saving program. Dive in below to see the specific partnerships and activities keeping this dual strategy on track.

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Key Partnerships

British American Tobacco (BTI) relies on several strategic alliances to drive its transformation toward New Categories and ensure responsible operations across its core business.

The collaboration with Accenture focuses on digital transformation and the integration of Agentic AI solutions, though specific financial metrics for this partnership aren't publicly detailed in recent disclosures.

For global marketing and innovation platforms, the multi-year partnership with McLaren Formula 1 Team remains central. BTI continues as an Official Principal Partner of the McLaren Formula 1 Team, a relationship rooted in technology and transformation since 2019. This extends to branding on the NEOM McLaren Formula E Team race cars. The partnership fuels global marketing for New Categories like Vuse and Velo, often through creative activations such as the 'Driven by Change' campaign, which has been running for four years.

Age verification technology deployment involves key retail partners. BTI is expanding its use of Yoti's facial age estimation (FAE) technology across Europe. As of late 2025, this deployment is active in over 600 stores, with plans to reach 1,000 stores by the end of the year. A recent pilot with the Channel Islands Co-operative Society Limited in 10 Coop stores in Jersey showed strong performance, with an overall accuracy rate of 99%. Specifically, the system achieved a True Positive Rate (TPR) of 99.3% for correctly identifying 13-17-year-olds as underage (when the threshold was set at 21 for estimation purposes in that pilot). BTI has used Yoti across its own vending machines in the UK since August 2023.

For core combustible product raw materials, BTI works with global leaf suppliers. The cost of these materials is a significant factor; in 2024, higher leaf prices contributed to £387 million in cost inflation. BTI mandates adherence to its Leaf Supplier Manual (LSM) and participation in the industry-wide Sustainable Tobacco Programme (STP) for all leaf suppliers. Within the Thrive Supply Chain, 94% of farmers reported having diversified crops in 2024, supporting income diversification. Furthermore, in 2024, 98.99% of farmers in the Thrive Supply Chain reported having sufficient Personal Protective Equipment (PPE) for agrochemical use.

Technology providers are crucial for R&D in reduced-risk products (RRPs), which include Vapour Products (Vuse), Heated Products (glo), and Modern Oral Products (Velo). BTI's R&D is led by many hundreds of scientists globally. The McLaren partnership also includes workstreams centered within exploratory R&D and co-innovation, sharing technology expertise to enhance the New Category product pipeline. The company aims to have 50 million consumers of its Smokeless Products by 2030 and reach at least 50% of its revenues from Smokeless Products by 2035.

Here is a quick look at the scale of some of these external relationships:

The commitment to responsible sourcing is quantified by supplier adherence metrics:

• 94% of farmers in the Thrive Supply Chain reported diversified crops.
• 98.99% of farmers in the Thrive Supply Chain reported sufficient PPE for agrochemical use.
• The aim is for 100% of in-scope product material suppliers to have undergone an independent labour audit within a three-year cycle by the end of 2025.

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Key Activities

You're looking at the core actions British American Tobacco p.l.c. is driving right now to manage its transition and deliver shareholder returns. It's all about execution against clear financial targets, so let's look at the numbers driving these activities.

The company maintains a significant global footprint, centered on optimizing its production base. As of the end of 2024, British American Tobacco p.l.c. owned 67 manufacturing facilities globally. This network includes specialized production for New Categories, with six factories dedicated to producing modern oral products and vapour liquids. This operational scale supports the distribution across its global reach.

A major focus is the Research & Development and commercialization of New Category innovations. For the first half of 2025, New Categories revenue reached £1,651 million, representing an increase of 2.4% at constant foreign exchange rates. Smokeless products now account for 18.2% of Group revenue, an increase of 70 bps versus the full year 2024. The New Categories contribution margin improved by 2.8 ppts to 10.6% at constant FX, with New Category contribution up 38.6% to £179 million at constant FX for the first half. Modern Oral revenue, driven by products like Velo Plus, was up 40.6%, while Heated Products revenue rose by 3.1%. The U.S. launch of Velo Plus alone delivered over 380% growth in modern oral revenue there. The total consumer base for smokeless brands grew by 1.4 million to 30.5 million consumers.

The commitment to financial discipline is operationalized through a strategic cost savings program. British American Tobacco p.l.c. has committed to deliver cost savings of over £1.2 billion in the three years ending in 2025. For context, savings delivered in 2024 amounted to £402 million. Looking ahead, an additional £2 billion in savings is targeted from 2026 to 2030. Capital deployment for the year includes a Gross capital expenditure of approximately £650 million for 2025.

Navigating the complex global regulatory and excise environments is a constant activity, primarily impacting the core combustibles business. The global tobacco industry volume is expected to decline by c. 2% for the full year 2025. In the first half of 2025, Group cigarette volume was down 8.7% to 229 billion sticks, and combustibles revenue declined 3.5% to £9,515 million. This segment's performance was negatively impacted by fiscal and regulatory challenges in markets like Bangladesh and Australia. Still, Group cigarette volume share declined only 10 bps.

Rewarding shareholders through capital allocation is a key activity, specifically executing the share buy-back program. British American Tobacco p.l.c. increased its 2025 share buy-back programme to £1.1 billion, up from an initial commitment of £900 million. This extension was funded in part by the net proceeds from the block trade of 313 million ordinary shares in ITC Limited. Following these transactions, including the sale of a 9% stake in ITC Hotels for approximately GBP 315 million, 5-6% of the company's issued share capital is held in treasury. The authority granted at the 2025 AGM permits the repurchase of up to 220,451,469 Shares. As part of the execution, the company purchased 126,177 ordinary shares from Banco Santander in one transaction.

Here's a quick summary of key financial metrics tied to these activities:

The deployment of innovations is expected to drive an accelerated H2 New Category performance, supporting the FY guidance of 1.0-2.0% Group revenue growth.

• Global tobacco industry volume expected decline: c. 2% (FY 2025 guidance).
• U.S. Combustible Revenue Growth: 3.8% (H1 2025).
• Total Smokeless Consumer Base: 30.5 million.
• Total Cost Savings Committed (2026-2030): £2 billion.
• Gross Capital Expenditure: Approximately £650 million (2025).

Finance: draft 13-week cash view by Friday.

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Key Resources

Portfolio of powerful global brands (e.g., Dunhill, Lucky Strike, Vuse, Velo)

• Dunhill
• Lucky Strike
• Vuse
• Velo

Extensive global supply chain and manufacturing infrastructure

Intellectual Property (IP) and patents for reduced-risk nicotine products

R&D Investments (2024): £425 million

Strong operating cash flow, with conversion expected to exceed 90% in 2025

Human capital expertise in tobacco science and harm reduction

• Smokeless Consumers Added (H1 2025): 1.4 million

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Value Propositions

You're looking at the core promises British American Tobacco p.l.c. (BTI) is making to its various stakeholders as of late 2025. It's a mix of defending the legacy business while aggressively pushing the next generation of products. Honestly, the numbers tell a clear story about where the focus is right now.

Combustibles: Premium, resilient brands with strong pricing power for adult smokers

For the adult smokers who haven't switched, BTI offers its established combustible brands, relying on strong execution and pricing to maintain value, even as industry volumes decline. The strategy here is clearly about maximizing returns from a shrinking base. Global tobacco industry volume is expected to be down about c. 2% for the full year 2025. Still, the U.S. market showed a return to form in the first half of 2025, with combustibles revenue increasing by 3.8%. This was supported by a strong price/mix uplift, which contributed to a 0.8% increase in overall combustibles revenue for the group in H1 2025. You saw this pricing power translate into share gains in the U.S., where volume share rose by 10 basis points and value share by 20 basis points. To be fair, this segment remains the bedrock, having accounted for 82.5% of BAT's revenues in 2024.

New Categories: Reduced-risk alternatives (Vuse, glo, Velo) for adult nicotine users

The value proposition here is providing adult nicotine users with alternatives to continued smoking. This segment is the growth engine, though it still faces challenges like illicit trade impacting vapor revenue. In H1 2025, New Categories revenue was reported at £1,651 million, representing a 2.4% increase at constant foreign exchange rates. Smokeless products now make up 18.2% of Group revenue, a gain of 70 bps versus the end of FY24. BTI is successfully growing its user base, having added 1.4 million consumers to its smokeless brands, reaching a total of 30.5 million consumers as of the mid-year report. The focus on profitability is also showing: the New Categories contribution margin increased by 2.8 ppts to reach 10.6% at constant FX.

Modern Oral: Velo Plus offers superior taste and convenience in the fastest-growing segment

The Modern Oral segment, led by Velo, is positioned as the fastest-growing area, emphasizing superior taste and convenience. Velo Plus is delivering exceptional results, especially in the U.S. market. In the U.S., the launch of Velo Plus drove modern oral revenue growth of over 380% in the first half of 2025. Globally, the modern oral category is growing by over 40%. Velo's global volume share reached 29.7% in key markets by mid-2025. This success in the U.S. specifically drove a +550 basis point increase in Modern Oral volume share to 11.9%.

Shareholders: Progressive dividend policy and commitment to capital returns

For investors, the promise is consistent capital returns underpinned by strong cash generation. The company increased its 2025 share buy-back programme by £200 million, bringing the total commitment for the year to £1.1 billion. BTI is also committed to delivering over £50 billion in free cash flow by 2030. You can see this commitment in the recent payouts; the November 2025 dividend was announced at $0.75 per ADS, or as a quarterly payment of 60.06p per ordinary share. Based on late 2025 data, the annual dividend stands at $3.04 per share, translating to a yield of 5.33% on one measure, or 5.61% on another.

Here's a quick look at the key financial metrics supporting these value propositions:

The transition is clearly visible in the consumer numbers:

• Added 1.4 million smokeless consumers in H1 2025.
• Total smokeless consumers reached 30.5 million.
• Modern Oral revenue growth in the U.S. was over 380%.
• New Categories contribution margin reached 10.6%.
• Long-term commitment to deliver over £50 billion free cash flow by 2030.

Finance: draft 13-week cash view by Friday.

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Customer Relationships

Mass-market branding and retail presence for traditional products.

The core combustible consumer segment, typically adults over 30, remains the financial bedrock, generating over 80% of British American Tobacco p.l.c.'s £27.28 billion 2024 revenue. British American Tobacco p.l.c. sold 518 billion cigarettes in 2024. The global tobacco industry volume is expected to be down c. 2% in 2025. Key traditional cigarette brands include Dunhill, Kent, Lucky Strike, Pall Mall, and Rothmans.

The relationship management for this segment relies heavily on extensive physical availability across the company's operations in around 180 countries.

Digital engagement and loyalty programs for New Category consumers.

The New Category consumer relationship is increasingly digitized, with digital channels now accounting for over 30% of New Category consumer acquisitions. The Vuse.com CRM platform supports this engagement, holding over 20+ million members globally. This digital interaction enriches customer lifetime value data, enabling personalized remarketing. The New Category segment, which includes Vapour, Heated Products, and Modern Oral, is a key focus for migration efforts, with a strategic goal to reach 50 million non-combustible product consumers by 2030.

The Modern Oral product category, featuring Velo, saw global consumers reach 7.4 million in FY24, a 54.2% year-on-year increase. In H1 2025, British American Tobacco p.l.c. added 1.4 million consumers to its smokeless brands, reaching a total of 30.5 million smokeless product consumers. The smokeless portfolio contributed 18.2% of Group revenue as of H1 2025.

Age-gated verification processes for all nicotine product sales.

All nicotine product sales are subject to age-gated verification processes, a critical element of responsible marketing. The New Category target demographic is generally adults aged 25-45, who are often more tech-savvy switchers. The company's strategy is to actively migrate smokers from cigarettes to smokeless alternatives by offering enjoyable and responsibly marketed products.

The Vapour category faces headwinds from illicit products, with 70% of the £9 billion U.S. vape market estimated to be illicit as of H1 2025. Vuse holds a 40% value share in tracked vape markets.

Dedicated B2B sales teams managing global distributor relationships.

British American Tobacco p.l.c. manages relationships through a dedicated B2B structure, which includes wholesalers, distributors, and a vast network of retail partners globally. This network is crucial for ensuring product availability for the entire portfolio.

The following table summarizes key customer and revenue metrics related to the relationship structure as of the latest available data:

The New Category contribution margin reached 10.6% at constant FX in H1 2025, an increase of 2.8 ppts.

• Velo Modern Oral volume share in U.S. Modern Oral up 550bps to 11.9% (H1 2025).
• Vuse holds 40% value share in tracked vape markets.
• The 2024 New Category revenue growth was 2.5%.
• British American Tobacco p.l.c.'s goal is 50% of revenue from Smokeless products by 2035.
• The company has a target of 50 million non-combustible product consumers by 2030.

The New Category contribution was up 38.6% at £179 million at constant FX for the full year 2024.

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Channels

British American Tobacco p.l.c. maintains its product availability through an extensive, multi-tiered channel strategy across its global footprint. The company has operations in around 180 countries as of 2025.

The foundation of product movement relies on its Global network of third-party wholesalers and distributors. These B2B partners are crucial for ensuring product placement across diverse geographies and retail formats. This traditional distribution backbone supports the core combustible business, which still generated revenue of £9.9bn in the first half of 2025.

For point-of-sale execution, the company leverages a Vast retail network (convenience stores, supermarkets). This network is essential for the high-volume, low-margin combustible segment, which accounts for approximately 80% of British American Tobacco p.l.c.'s total revenue. The efficiency of this physical channel is what allows the company to maintain stable total industry volume and value share despite overall industry volume declines of approximately c. 2% expected for the global tobacco industry in 2025.

For New Category products, the approach shifts toward direct consumer engagement via E-commerce and dedicated brand websites. Digital channels now account for over 30% of New Category consumer acquisitions, which helps in gathering data for personalized remarketing campaigns. This digital push supports the growth of smokeless products, which reached 30.5 million consumers in the first half of 2025, up by 1.4 million consumers since the end of 2024.

The distribution for Vapour and Heated Tobacco products is often channeled through specialized outlets, though the strategy varies by market. The company targets specific geographic areas for its New Category brands, with the top 5 Vapour markets (US, Canada, UK, France, Germany) covering an estimated c.80% of global closed system revenue. The Modern Oral segment, like Velo, is seeing strong growth, with its share of Total Oral volume up 270 bps in top markets.

Here are some key channel-relevant statistics as of mid-2025:

The company is focused on deploying innovations in key markets to accelerate New Category revenue growth in the second half of 2025, following a low-single digit growth in the first half.

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Customer Segments

You're looking at the core groups British American Tobacco p.l.c. (BTI) serves right now, late in 2025. It's a split focus: defending the massive cash flow from legacy products while aggressively growing the next generation of nicotine.

Core Combustible Users: Adults over 30

This group is the financial bedrock, plain and simple. They are typically adults over the age of 30, often with a historical skew towards males and higher prevalence in lower socioeconomic groups. This segment remains the primary revenue driver, generating over 80% of the company's £27.28 billion 2024 revenue. However, this base is shrinking structurally; the global tobacco industry volume is expected to be down about c. 2% in 2025. In the key US market, combustibles industry volume faced pressure, down about c. -9% Year-to-Date in the first half of 2025.

Adult Switchers: Health-conscious, tech-savvy adults aged 25-45 adopting New Categories

This is the growth engine. The New Category portfolio is explicitly aimed at adults aged 25-45 who are more health-conscious and tech-savvy. The total number of consumers for smokeless brands reached 30.5 million as of June 2025, after adding 1.4 million consumers in the first half of the year alone. This segment now contributes 18.2% of Group revenue as of H1 2025. The Modern Oral segment, led by Velo Plus, is seeing explosive growth, achieving triple-digit growth in H1 2025. In the US, Velo Plus drove a +550 basis point increase in Modern Oral volume share, capturing nearly 11.9% of that market.

Here's a quick look at the segment split based on recent figures:

The company's long-term ambition is to reach 50 million consumers of its Smokeless Products by 2030.

Global B2B Partners and Geographic Focus

British American Tobacco p.l.c. operates as a leading FTSE company with a global footprint, serving wholesalers and retail distributors across its operational regions, which include the United States of America; Americas & Europe (AME); and Asia Pacific, Middle East & Africa (APMEA). While the outline specifies 180+ markets, the company is spread across six continents. The B2B partners are essential for product availability across this vast network.

The geographic focus highlights specific market dynamics:

• The US market is key, with management expecting a return to revenue and profit growth in H1 and FY 2025.
• The US Vapour category faced challenges from illicit products, with the legal industry volume down mid-teens Year-to-Date.
• The European heated tobacco users are a target, with the glo Hilo device showing strong trial-to-conversion rates in pilot markets like Serbia.
• The AME region continued its strong performance through the first six months of 2025.

The company employs over 48,000 people worldwide to manage these segments and distribution channels.

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Cost Structure

You're looking at the major drains on British American Tobacco p.l.c.'s cash flow for 2025. The cost structure is heavily influenced by the physical production of traditional products, the necessary investment in the New Category transition, and the significant tax burden imposed globally.

The Cost of Goods Sold (COGS) remains a high component. Inflation is definitely hitting the supply chain. For the first half of 2025, inflation on product costs was estimated to be around 6.2%, which translated to an impact of approximately £166 million. This pressure affects both raw materials, like tobacco leaf, and general manufacturing costs.

Capital allocation for the future is substantial. Gross capital expenditure (CapEx) for the full year 2025 is projected to be approximately £650 million. This spending supports the ongoing operational needs and the deployment of New Category innovations across key markets.

Financing costs are a predictable, large outgoing. Net finance costs for 2025 are expected to be around £1.8 billion, though this figure remains subject to interest rate volatility.

Here's a look at some key financial expectations for 2025:

• Gross capital expenditure in 2025: £650 million.
• Net finance costs expected: c. £1.8 billion.
• Inflationary impact on product costs (H1 2025): £166 million.
• Operating cash flow conversion target: Exceeds 90%.

The drive toward New Categories requires significant investment in commercialization and marketing to build consumer adoption. This is a strategic cost center, as seen by the New Category contribution growing to £179 million in the first half of 2025 at constant foreign exchange rates, indicating substantial upfront spending to secure future revenue streams.

Taxes are a massive external cost factor British American Tobacco p.l.c. cannot control. Substantial excise duties and tobacco-specific taxes are levied across all operating jurisdictions. For instance, challenges in the Asia Pacific, Middle East & Africa region in H1 2025 were partly driven by increased excise duties in markets like Bangladesh.

You can see the scale of investment in New Categories versus the prior year's cost impact in this comparison:

Research and Development (R&D) is also a key area of expenditure, particularly for developing and scaling next-generation products like Velo Plus and glo Hilo. While a specific 2025 R&D total isn't immediately available, the focus on deploying innovations in H2 2025 confirms this is an active cost area.

The company is actively managing these costs through financial discipline. They have a commitment to deliver cost savings of over £1.2 billion in the three years to 2025, with an additional £2 billion planned from 2026 to 2030. This focus on savings helps offset the structural cost increases like inflation and mandatory taxes.

Finance: draft 13-week cash view by Friday.

British American Tobacco p.l.c. (BTI) - Canvas Business Model: Revenue Streams

You're looking at the core money-making engine for British American Tobacco p.l.c. (BTI) as of late 2025, which is still heavily weighted toward its legacy business but showing clear movement toward New Categories.

The primary revenue generator remains the traditional segment. Combustible Product Sales still form the bedrock, generating approximately 81% of the total revenue for the full year 2024. This stream is being managed for value, not volume, evidenced by the Group organic price/mix being reported at +5.3% in 2024, which helped offset a 9.0% fall in combustibles volume that year. The financial performance in this segment is definitely being supported by strong pricing actions. For instance, in H1 2025, the improved combustibles financial performance was explicitly attributed to price/mix. [cite: 1, 4, 5 (second search), 1 (first search)]

The strategic pivot is visible in the growth of New Categories, which include Vapour, Heated Tobacco, and Modern Oral products. As of the first half of 2025, this segment accounted for 18.2% of the Group's total revenue, marking an increase of 70 basis points versus the full-year 2024 figure. [cite: 1, 4 (first search)] The absolute revenue for New Categories in H1 2025 was £1,651 million, representing a 2.4% increase at constant foreign exchange rates. [cite: 4 (first search)]

Here's a quick look at how the revenue composition is shifting based on the latest reported figures:

The overall expectation for the current fiscal year reflects this transition. British American Tobacco p.l.c. expects the full-year 2025 Group revenue growth to be in the range of 1% to 2%, measured at constant currency rates. [cite: 1, 4 (first search)] This growth is anticipated to be weighted toward the second half, driven by the deployment of New Category innovations. [cite: 2, 3 (first search)]

You can see the underlying drivers of this expected growth:

• Pricing power within the Combustibles segment. [cite: 3 (first search)]
• Product mix shift favoring higher-value offerings.
• Phased roll-out of New Category innovations in key markets. [cite: 1, 4 (first search)]
• Strong global growth from Velo in Modern Oral. [cite: 2 (first search)]

For context on the H1 2025 performance, the Group's total revenue was down 2.2% on a reported basis, primarily due to currency headwinds, but it was up 1.8% at constant FX. [cite: 4 (first search)] Finance: draft 13-week cash view by Friday.