The UK’s largest tobacco firm says it sees cannabis as part of its future as it tries to move away from selling traditional cigarettes.
Jack Bowles, boss of British American Tobacco, said cannabidiol (CBD) vaping was “part of the future” but the challenge was “encouraging people to switch” to healthier products.
The tobacco giant is running a pilot of a new CBD vape product in Manchester.
It said more than a third of its UK revenues now come from vaping.
Releasing its half year results to the end of June, British American Tobacco (BAT) reported an 8.1% rise in revenues to £12.18bn.
Revenues for vapour brands Vuse, Velo and glo rose 59% for the period.
The tobacco giant also saw its fastest gain in new customers, with users of non-combustible products – such as vapes – jumping 2.6 million to 16.1 million.
Mr Bowles told BBC Radio 4’s Today programme that the firm is looking to “accelerate” its transformation by “reducing the health impact” of its business.
In March, the tobacco giant took a 20% stake in Canadian medical cannabis maker Organigram and signed a deal to research a new range of adult cannabis products, initially focused on CBD.
“As we think about our portfolio for the future, certainly beyond nicotine products are interesting for us as another wave of future growth,” said Mr Bowles.
Tobacco sales recover
Despite its commitment to healthier choices, BAT said sales of its cigarettes recovered in some developing nations following the end of coronavirus lockdowns when sales were banned in some countries.
Sales of brands like Dunhill, Kent, Lucky Strike and Rothmans rose in the first half of the year in countries such as Brazil, Turkey and Pakistan.
Despite this, BAT said overall revenue from its combustibles division – cigarettes and heated tobacco products – fell 3% to £10.5bn.
William Ryder, an equity analyst at Hargreaves Lansdown, said that there is still some way to go if the tobacco giant is to meet its target of £5bn in revenues from nicotine alternatives by 2025.
“For now… BAT is still dependent on cigarettes… Traditional tobacco products still pay the dividend, and will do for some time,” he said.