British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Investor Day (2024)
40 slides from British American Tobacco P.l.c's investor day presentation, Oct 25, 2024
Slide 1: Building a Smokeless World
Building a Smokeless World 7.83" Building our Brands: Vapour, Heated Products & Modern Oral Luciano Comin, Chief Marketing Officer
Slide 2: Confidential – For internal discussion purposes only
Confidential – For internal discussion purposes only – not for further circulation
Slide 3: Building a Smokeless World
Building a Smokeless World 7.83" * *#1 global vape brand: based on Vuse estimated value share of vapour pods and pre-filled devices from recommended retail price in total measured retail in key vapour markets: U.S., Canada, France, UK, Germany, Poland and Spain as of May’24. See Appendix A3.
Slide 4: Vapour: facts about the category
Vapour: facts about the category Vaping is the biggest category Vapour is as good in Rechargeable closed systems and growing* switching smokers as HP** back to growth*** Users (m) % of active users who Format share of total vapour value in stopped smoking daily measured channels 42 36 30 82% 2024 20
Slide 5: Vapour: facts about the category c.£8bn
Vapour: facts about the category Regulation & enforcement key Building trust will be key** Untapped premium to unlocking potential* opportunity *** Inaccessible Vapour revenue due to Vapour premium size today: c.3% non-compliant products Potential premium size % of total vaping users c.£8bn 60% • Pr
Slide 6: Vuse has the brand credibility to succeed
Vuse has the brand credibility to succeed Continuous Category Vype’s Introducing innovation in Vuse Launching Entering entry with 1st closed open systems rechargeable is now single-use products a new era ciga-like system (ePen) & eLiquids closed systems connected globally of closed systems 2013 2014
Slide 7: Vuse: the brand pillars
Vuse: the brand pillars LOVED TRUSTED PROFITABLE Strong and powerful brand Lead and own trust Craft and own premium • Inspired by our leading • Exceptional product stewardship • Retaining our consumer base multi-category consumer driving consumer trust and • Focused and targeted insights supporting
Slide 8: Vuse: global leader, higher consumer retention
Vuse: global leader, higher consumer retention T7 brand value market share (H1 2024)* Within pod consumables devices and single-use products U.S. CAN UK GER FRA POL SPA *** Vuse Rechargeable Total Vapour Rechargeable closed system closed system retention** measured universe measured universe 71% 59.
Slide 9: Building trust: responsible innovation
Building trust: responsible innovation Our commitment to responsible vaping Competitor Competitor 01 02 Adult targeted flavours and descriptors Accidental access prevention Age-verified connected platform Rechargeable/ removable battery We do not use sucralose Not in the liquids we develop available
Slide 10: Vuse: our product portfolio
Vuse: our product portfolio GER CAN SA Premium connected Key features that are present rechargeable in our products and platforms: • New ceramic heating Simple rechargeable technology for improved taste closed system • Liquids made in U.S. NEW • 99% less toxicants than cigarettes* Single-use devices
Slide 11: Vuse Go: improved satisfaction and removable battery
Vuse Go: improved satisfaction and removable battery NEW New Vuse Go Enhanced sensorials Promising early results superior taste & features Consumer product test New heating tech 24 markets (7-point scale) Up to 1000 puffs* by end Sept‘24 Vuse Go value share within single-use segment** Easy view liqu
Slide 12: Vuse Go Reload: simple, innovative closed system
Vuse Go Reload: simple, innovative closed system NEW Vuse Go Reload range Enhanced sensorials Promising early results & features New, improved pod 18 markets Up to 1000 puffs*. Powered by end Sept‘24 by ceramic heating tech Volume share of devices Aug’24 Longer lasting battery Ready to vape kits Tot
Slide 13: Vuse Ultra: next level premium
Vuse Ultra: next level premium 360 experience touchpoints Need for premiumised Premium design with experiences tech-led features Opportunity to address taste New FlavourMax Technology & flavour experience Desire for customisation CloudControl features across moments Consumer usage anxiety about Intu
Slide 14: Vuse: continuous profitability improvement
Vuse: continuous profitability improvement Positive category contribution* since 2022 % Gross margin Resource Profitability path to revenue ratio allocation Focusing investments Profitable markets where it matters amongst Top 20 51% 10 85% 40% 25% 5 2 investment in Top 20 markets 2021 2022 2023 2021
Slide 15: We are confident in Vuse quality growth journey
We are confident in Vuse quality growth journey 1 Vapour is largest and growing category - comparable conversion ratio to HP * 2 Vuse is the global leader - particularly in rechargeable closed systems 3 We have a winning portfolio - unique consumer insights and exceptional assets 4 Relevant growth o
Slide 16: Building a Smokeless World
Building a Smokeless World 7.83" *We’re always improving. glo heats specially designed sticks instead of burning them, generating an aerosol, less odour and no ash compared to smoking a cigarette. This product is not risk-free.
Slide 17: Heated products: facts about the category
Heated products: facts about the category Heated Products Category Biggest Concentrated in key Industry growth is Premium-driven new category by developed markets** slowing down due to consumers the revenue* NC poly usage with biggest quality Vapour and attrition*** growth opportunity^ c. £10bn 2024
Slide 18: Despite constraints, glo achieved sizeable positions
Despite constraints, glo achieved sizeable positions 1st generation 2nd generation King Size Super-slim consumables Demi-slim consumables 5 upgrades 4 upgrades #2 Global Heated Product brand equity* 18% volume CAGR+ 31% volume CAGR 2023 58% T9 Share in affordability-driven segment** 2% T9 Share in p
Slide 19: glo: the brand pillars
glo: the brand pillars Strengthen brand love Robust innovation Maintain leadership Ready to compete & product pipeline in affordability segment in premium segment 19
Slide 20: glo: the brand portfolio
glo: the brand portfolio Strengthen brand love Robust Maintain leadership Ready to innovation & in affordability compete in product pipeline segment premium segment I II NEW Step change in Breakthrough innovation pivoting to consumer experience premium-driven consumers 20
Slide 21: (Video - glo Hyper Pro)
(Video - glo Hyper Pro) Ww > q ” 2026
Slide 22: Step change in consumer experience
Step change in consumer experience 1st to introduce Consistent global Ease of use brand building EasyView & control screen* 1st to introduce Flavour & tobacco free taste satisfaction substrate Taste satisfaction Heatboost customisation technology Hygiene StickSeal & identity technology *Globally 1st
Slide 23: Delivering resurgent performance
Delivering resurgent performance Appealing to Increasing Enhancing Improved premium average daily retention*** volume share**** consumers* consumption** HYPER % (Mar’24 to HYPER Dec’23 vs. Aug’24 Index vs. Jun’24) vs. (9m post launch) 25% 8 ppts +20% 109 +50bps JPN 33% 9 ppts +9% 109 +30bps ITA * BA
Slide 24: glo: the brand portfolio
glo: the brand portfolio Strengthen glo brand equity Robust Maintain leadership Ready to innovation & in affordability compete in product pipeline segment premium segment II NEW Breakthrough innovation pivoting to premium-driven consumers 24
Slide 25: Say Hello to Hilo
gle Say Hello to Hilo New heating technology, heats more’ for great taste *Compared to glo” devices
Slide 26: What consumers say about Hilo?
What consumers say about Hilo? “This is like one rank up from the existing products. Wow! It treats me like I am special.” “This is progress, Female, glo user, Japan glo is moving “This actually makes me sit up forward.” Male, category user, Italy and notice glo Hilo...they look refined and forward
Slide 27: glo Quality Growth journey
glo Quality Growth journey 1 Heating products is the biggest category in terms of revenue - a sizeable & focussed opportunity 2 Value segment growing fast - yet premium remains the biggest opportunity 3 Maintaining our leadership in value segment - driven through stronger hyper competitiveness 4 Piv
Slide 28: Building a Smokeless World
Building a Smokeless World 7.83"
Slide 29: Modern Oral: facts about the category
Modern Oral: facts about the category Modern Oral Category Fastest growing Reaching Highly profitable Still locked in big New Category* global scale** Combustibles Industry revenue Gross margin accretive markets 31% ‘24-’30 (£bn) vs. Combustibles 9.9 Users, CAGR ‘22-’24 2.7 GER TUR BRA faster than H
Slide 30: BAT has been pioneering Modern Oral category since 2017
BAT has been pioneering Modern Oral category since 2017 BAT Modern Oral category historical overview BAT MO Revenue (£m) CAGR ‘18-’23 62.4% Portfolio consolidation behind 531 Velo brand Flavour & nicotine SWE portfolio Geo expansion New Velo entry range expansion Winnington AB outside Nordics launch
Slide 31: Our ambition: to lead the Modern Oral category globally
Our ambition: to lead the Modern Oral category globally Drive Velo brand Strong product portfolio Winning in U.S. and love and innovation pipeline rest of the world 31
Slide 32: (Video - Velo)
a) SAT (Video - Velo) ” 2026
Slide 33: We have built a distinctive & most loved Velo brand
We have built a distinctive & most loved Velo brand Differentiated & relevant brand positioning Leading brand strength score* except the U.S. #1 116 #1 209 SWE SWI #1 195 #1 104 DEN UK UK JPN #3 35 U.S. *Brand strength score ranking / Velo brand strength score Index vs. competition (%); Source: BAT
Slide 34: We have a strong product portfolio
We have a strong product portfolio New markets range Product satisfaction Robust flavour portfolio Strong entry product Nicotine delivery technologies Broad flavour variety Over 80% of core portfolio evaluated on par or superior vs. closest competitor* * Core SKUs represent portfolio across major Mo
Slide 35: Innovation: we will continue to evolve
Innovation: we will continue to evolve Innovating on Offering superior Introducing key category benefits style & comfort new benefit spaces Flavour stabilisation New premium mix Zero nicotine / & new technologies alternative actives ...further advancing competitiveness & protected by IP 35
Slide 36: Velo brand equity enabling share growth
Velo brand equity enabling share growth BAT Modern Oral category volume share, % SWE NOR DEN SWI UK POL U.S. 64.9% 64.8% 7.5% 64.7% 64.5% 64.3% 64.4% 64.1% 63.9% 63.7% 4.2% 63.5% Jun'23 Jun’23 Aug’24 Jun-23 Jun’23 Aug-24 Aug’24 Source: BAT & third-party market research. Measured retail (suppliers di
Slide 37: Introducing new Velo range in the U.S.
Introducing new Velo range in the U.S. Competitive product Broad variety of flavours In market as of Dec’24 & nicotine levels ...further building on our growth momentum 37
Slide 38: We will continue to expand our geo footprint
We will continue to expand our geo footprint 2024 footprint 44 markets 36% of Combustibles volume base* still not covered ...retaining our first mover advantage *Percentage of global Industry volume for markets where Modern Oral is banned or un-regulated. Excluding India, China, Russia 38
Slide 39: We are well equipped to drive Modern Oral growth globally
We are well equipped to drive Modern Oral growth globally 1 Modern oral is, & will continue to be, the fastest growing category - reaching global scale & is highly profitable 2 Leading position in Europe - growing share in the growing category 3 Winning global mix - distinctive brand & product portf
Slide 40: Appendix
Appendix A1: Adjusting (Adj.) Adjusting items represent certain items which the Group considers distinctive based upon their size, nature or incidence. A2: Constant currency Constant currency – measures are calculated based on the prior year's exchange rate, removing the potentially distorting effec