The tobacco giant British American Tobacco (BAT), which makes Lucky Strike and Dunhill cigarettes, is cutting 5,500 jobs and outsourcing another 3,500.

It did not specify the sources of the cuts but assured that the US will remain unaffected.

Earlier this year, BAT said it was planning savings to make the business “more digital and AI-focused”.

Traditional cigarette sales are shrinking as smokers increasingly switch to vapes and nicotine pouches.

BAT is shifting its focus to smoking alternatives such as its Vuse vapes and Velo nicotine pouches to drive growth, but sales and profit margins have been sluggish in recent years.

Dan Coatsworth, head of markets at AJ Bell, said: “The tobacco industry has found the transition from cigarettes to next-generation products to be a slow one.

“Vaping is now commonplace, yet product manufacturers are battling challenging market conditions caused by a proliferation of illegal products.”

BAT currently employs around 47,000 people globally.

It says the cost cuts are expected to save about £600 million a year by 2028.

Sales in the US — its biggest market — have also been hit by the cost of living, as smokers swap for cheaper brands.

Additionally, the company is battling rising duties and stricter regulations in some markets.

American regulators have taken a tough stance on approving licenses for new products such as vapes, delaying launches.

BAT says this has fuelled an influx of illegal Chinese products, weighing on its sales and market share.

Tadeu Marroco, chief executive at BAT, said: “These cuts will make the company more agile, cost disciplined and technology enabled.

“These changes affect many of our colleagues, and we are focused on supporting them through this transition with care and respect, as we position the business for the future.”

BAT said the job cuts, which have already begun, are set to be completed by the end of the year