British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Investor Day (2024)
19 slides from British American Tobacco P.l.c's investor day presentation, Oct 25, 2024
Slide 1: Building a Smokeless World: The U.S. Market Opportunity
Building a Smokeless World 7.83" The U.S. Market Opportunity David Waterfield, President of Reynolds Jeff Raborn, U.S. EVP Law & External Affairs
Slide 2: U.S. market opportunity overview
U.S. market opportunity overview • U.S. • USmarket represents the largest is the & most valuable cornerstone of BAT’snicotine market strategy & at the forefront of industry transformation • Nearly 40 million adult consumers using nicotine across product • U.S. represents the largest & most valuable
Slide 3: Biggest nicotine revenue pool globally
Biggest nicotine revenue pool globally 2024 U.S. Estimated nicotine industry The U.S. opportunity revenue pool £41bn • Consumer landscape changing rapidly Vapour • Sizable & growing contestable space £9bn Combustibles £27bn • One-third of the global nicotine n.m. value pool Oral £5bn Source: Interna
Slide 4: Biggest nicotine revenue pool globally
Biggest nicotine revenue pool globally 2024 U.S. Estimated nicotine industry Transformation since Reynolds acquisition revenue pool (2017) £41bn +40% Nicotine revenue Vapour pool growth £9bn Combustibles £27bn +280% n.m. Oral Smokeless revenue £5bn pool growth Source: Internal estimates; Vapour incl
Slide 5: U.S. Combustibles value pool
U.S. Combustibles value pool 2024 U.S. Estimated nicotine industry Combustibles industry historical trends revenue pool £41bn +1.2% 2017–2024 Combustibles revenue CAGR Revenue Vapour Volume Price/Mix* c.+1.0% £9bn Combustibles -6.1% +7.3% CAGR‘24–‘30 £27bn CAGR‘17–’24 CAGR‘17–’24 n.m. Macroeconomic
Slide 6: Significant Vapour & Modern Oral growth opportunity
Significant Vapour & Modern Oral growth opportunity 2024 U.S. Estimated nicotine industry Vapour industry trends (emerging segment) revenue pool £41bn Consumers Revenue Revenue c.25m £9bn £12bn – £14bn +70% +800% c.+8% vs. 2017 vs. 2017 CAGR‘23-’30 Vapour £9bn 2024 2030 Combustibles £27bn n.m. Moder
Slide 7: Delivering strong financial returns alongside significant new capabilities
Delivering strong financial returns alongside significant new capabilities New capabilities acquired £80bn*** +3% CAGR £3.6bn c.50m Cumulative NC revenue Consumers 34% CAGR £41bn^ +7% CAGR 3 c.300k Factories Retailers +£26bn £10bn Accumulated revenue Accumulated APFO Dividends £5bn paid** R&D 2017*
Slide 8: Established multi-category portfolio for growth
Established multi-category portfolio for growth 52% U.S. Combustibles poly-user* consumers 64% U.S. nicotine consumers interacting or migrated to New Categories Strong Combustibles brands Leader in legal Vapour market Transforming Oral brands Market leader in menthol Fastest growing in premium Faste
Slide 9: Strengthening our U.S. Combustibles business
Strengthening our U.S. Combustibles business Strengthening affordability through laddering Re-establishing trade capabilities with our retail partners 82% 88% Volume share** Soft pack Volume share* Sales coverage Sales coverage +2.5ppts Weekly sales avg. 3.4% Q3’23 Q2’24 in newly contracted outlets
Slide 10: Delivering improved performance through our commercial actions in 2024
Delivering improved performance through our commercial actions in 2024 Premium segment volume share* Continued signs of volume and value share recovery * 44.6 44.7 44.9 43.1 Volume share bps FY23 vs. FY22 YTD24 vs. FY23 Total U.S. Combustibles -10 -10 Total Combustibles volume share excl. deep disco
Slide 11: Vapour leadership in U.S.
Vapour leadership in U.S. Leadership in U.S.* Enhanced proposition Innovative launch National leader PRISMATIC series SENSA 50.8% 1.2% 2.9% YTD Aug’24 Aug’24 national value share** Aug’24 volume share^ value share Launched July Launched July Differentiation Brand premiumisation through innovation Le
Slide 12: Reinvigorating our Modern Oral performance
Reinvigorating our Modern Oral performance Volume +93% Volume share 0.7% YTD vs. SPLY Aug’24 Volume share +2.7ppts YTD Aug’24 vs. relaunch (Aug’23) Product parity vs. Purchase interest main competitor 78% Insights Insights Awareness growth Grizzly consumer fit +2.5ppts Q2 vs. Q1’24 87% Trial to repe
Slide 13: Enhancing our future portfolio through innovation
Enhancing our future portfolio through innovation 2021 2024 2025 2026+ Original offer Relaunched mix Expansion Pipeline readiness Pending PMTA Velo 2.0 PMTAs submitted to strengthen our pipeline Capitalising on BAT’s leadership (Europe & ROW) Modern Oral portfolio expansion to deliver on adult consu
Slide 14: Actively supporting more effective U.S. Vapour enforcement
Actively supporting more effective U.S. Vapour enforcement Illegal Vapour enforcement Science prevails Proposed rule requiring submission of tracking numbers at import Alto tobacco Marketing for Vapour products Granted Order Federal multi-agency task force formed to curb illegal Vapour Increased FDA
Slide 15: Much more needs to be done to drive a meaningful impact against illicit
Much more needs to be done to drive a meaningful impact against illicit Enforcement media pressure mounts on FDA Other actions International Trade Commission (ITC) REDUCED House Energy & Commerce Hearing Sep 10, 2024 Senate Judiciary Hearing Jun 11, 2024 Investigating unfair acts in the importation
Slide 16: State enforcement is gaining traction
State enforcement is gaining traction 14 state Vapour enforcement bills Louisiana blueprint to be enacted in the next 3-18 months Comprehensive regulation with dedicated funding c.£6bn Illegal single-use Vapour revenue Proof of filed Online sales PMTA ban Mfg Directory Funding Fee Existing directory
Slide 17: Louisiana enforcement is driving encouraging results
Louisiana enforcement is driving encouraging results Louisiana effective enforcement results Louisiana blueprint Comprehensive regulation Vapour industry Vuse with dedicated funding +28% -91% +34% +2.1ppts Proof of filed PMTA Online sales ban Legal Vapour Tracked single-use Vuse volume Vuse market s
Slide 18: The U.S. opportunity: the size of the prize
The U.S. opportunity: the size of the prize The opportunity today Reasons to believe The size of the prize by 2030 2024 U.S. developing segments revenue Effective & efficient 2030 U.S. developing segments revenue pool estimates pool estimates regulatory process £14bn £19bn – £24bn Vapour Oral Effect
Slide 19: 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