OUR STRATEGY

Focus on our priority markets

A focused approach is creating growing revenue and profit from our largest tobacco businesses

Five markets – the United States, Germany, the UK, Spain and Australia – contribute around 70% of operating profit. A key pillar of our strategy is a focus on driving value in these businesses through targeted brand building, improvements in sales capabilities and careful portfolio management. Our ambition is to maintain stable market share in aggregate and in any given year some markets will grow share while other markets may see reductions. In 2024, we recorded the fourth consecutive year of stable or growing aggregate share alongside strong pricing. Share gains in the US, Germany Spain and Australia have more than offset declines in the UK.

Driving value from our broader market portfolio

We focus on the medium-sized and smaller markets with the strongest opportunities for future growth

We have developed a rigorous approach to managing our broader portfolio of markets. This involves stronger consumer engagement, targeted investment in brands and improved sales execution. The establishment of the Africa, Asia, Australasia and Central & Eastern Europe cluster has enabled stronger performance management of these markets and more effective sharing of best practices. We utilise the same tools as our largest five markets to drive performance across our broader market portfolio.

Building scale in NEXT GENERATION PRODUCTS

We are defining a distinctive challenger position offering strong consumer choices across multiple categories

Our consumer-led, partnership approach to innovation and development means we now have attractive propositions across all categories: vape, heated products and oral nicotine. However, we continue to be disciplined in our market entry strategy – only launching products where there is existing consumer demand for the category and where we already have strong routes to market. Since 2020, at actual exchange rates we have grown NGP net revenue by 64%, and NGP now accounts for 4% of tobacco and NGP net revenue.

During 2024, we grew NGP net revenue across all three of our global regions – and across all categories. US performance was driven by the launch of our new Zone oral nicotine pouches. In the Europe region, growth was led by our refreshed portfolio of vaping products including the new blu bar disposable and the rechargeable blu bar kit. In AAACE, we are building consumer loyalty in heated products, including our new iSenzia tea-based sticks.

SIMPLIFYING AND BECOMING MORE EFFICIENT

New ways of working and improvements in tech and data are enabling more sustainable growth

Our 2021 strategy identified a need to better integrate our operations to become simpler and more efficient. We have made significant structural changes to our enabling functions including finance, IT and People & Culture to help these teams partner more closely with the business. Our Global Business Services unit, set up in 2022, is now well established and across our global factory footprint, we are improving standardisation, driving a safety-first and qualityfirst approach. We have also embarked on Unify, our multi-year business transformation programme, enabling the simplification of our operations and making them more efficient by standardising our core business processes, harmonising our data and unifying our core system that connect us globally to provide enhanced business and consumer insights, enabling informed decisions at speed for us to be an agile and challenger business. In October 2024, we passed an important milestone with the first market cluster adopting these tools.

DEVELOPING OUR PERFORMANCE CULTURE

We have a structured approach to becoming a more accountable, collaborative and inclusive organisation

Our progress towards becoming a consistently high-performing business has been driven by an integrated multi-year programme. Underpinning all our activities have been our five behaviours: Start with the Consumer; Collaborate with Purpose; Take Accountability with Confidence; Be Authentic and Inclusive to all; and Build our Future. Key activities for 2024 have included an expansion of the Connected Leadership programme, which enables our senior people to become better coaches and unlock the full potential of their teams. We have also launched new initiatives to support career development and the acceleration of high-potential female leaders. As part of our wider diversity, equity and inclusion ambitions, we are committed to raising the proportion of women among our senior leaders to 35% by 2027. This year we maintained our strong engagement score of 74%, one point above the global benchmark.

Putting the Consumer at the centre of the business

Investments in insights, innovation, marketing and portfolio management are supporting success in global markets

The tobacco and nicotine environment is undergoing transformative change with consumer tastes becoming more eclectic. The pace of innovation is accelerating and there is now a broad NGP ecosystem where partnering is important to success. To capitalise on these long-term trends, we have been patiently investing in our consumer capabilities. In consumer insights, there has been a step-change in our level of consumer interactions. During FY24 we conducted a total of 220,000 interviews and, at any one time, we have at least 70 research programmes in flight. Also during the year, we opened a new sensory laboratory in Shenzhen adding to our existing facilities in Liverpool and Hamburg. In revenue growth management, after initial pilots, we have begun a global roll-out of SWIPE, our new price simulation tool.