Episode 28: Tadeu Marroco

Tadeu Marroco
Success is 5% strategy, 95 execution. So listen, digest, yeah, make a call.

Kingsley Wheaton
BAT, old-fashioned cigarette company, transforming that has quite big challenges, doesn't it? It

Tadeu Marroco
is because it's a completely reinvention. Your need to innovate, change dramatically, and you have to transform and perform at the same time,

Kingsley Wheaton
All at once.

Kingsley Wheaton
Today, I am honoured to be joined by none other than BAT's very own Chief Executive Tadeu Marroco. Tadeu joined BAT over 30 years ago. In fact, 34 years ago, at the ground floor of the business as a graduate trainee, in fact, he tells the story of how he nearly took a completely different path. Today, he's leading us through probably the biggest transformation in our company's 125-year history. We talk about leadership, we talk about decision making, innovation, and the launch of the new Omni 2026 edition, as well as how we navigate regulation when science, policy, and consumer choice doesn't always align, and through it all, how to perform and transform at the same time. This really is a conversation that you don't want to miss. Please enjoy.

Kingsley Wheaton
This podcast is intended for regulators, scientists, policymakers, and investors only. The views expressed in this podcast are the personal opinions of the speaker only. Any references to products having a reduced risk or reduced harm are based on the weight of evidence and assume no continued smoking. This material is not intended for U.S. audiences. Today, welcome to the smokeless word. It's great to have you here. Thank you for having me, Kingsley. No, not at all. And do you like the studio? Is what you expected?

Tadeu Marroco
Yes, in a way, yes. Yeah. Very simple, very cozy.

Kingsley Wheaton
Yeah,

Tadeu Marroco
and yeah, with a lot of equipment, so it's fantastic.

Kingsley Wheaton
Good, good. Let's start if we can with your kind of early life career. Tell me about joining BAT. Is it 30 34 years, isn't it? 34

Tadeu Marroco
years, yes. 34

Kingsley Wheaton
years ago. Yes. How was that? You know, what encouraged you to join BAT, and and how did your friends and family feel about it?

Tadeu Marroco
Well, look, I was not particularly targeting BAT at that time. I was coming out of my MBA. I did a, I studied engineering, and then I did a small period in Accenture, and I decided to to leave Accenture to do a full time two years MBA, and at that point in time, my the MBA was receiving some companies interesting offering you know vacancies you know job opportunities for those that were graduating at that particular time. So I went through the process. They pre-select 20 out of my class of 50. I was one of the 20. So we went through all the interview, all the you know the selective process. At the end, they find they finalise with four. They come to a, and they had two vacants. Right. So I have 50 50 chance to go through, and this happened on the December, and and part of I have just managed to get an extension of my MBA outside in France for a second year in France in a management school in France, which I was very keen to go. I had advised them earlier in the process, but probably they forgot that as the process go move along. But I was very keen to secure a job and then move on to France, conclude my MBA there, leave this first experience outside Brazil, and and then you know coming back join a large group like BAT, and so when I was in my you know the last interview in this process, you know the senior member that was interviewing me, he said, "So you are all settled if I decide to go with you to start second January? I said, "No, not really, because and then I explained that I have gone through this this program, and I was very keen to go and very proud to have achieved that. Very few have gone that, and and then I and then he said, "Well, so best of luck. We cannot wait for you. We need the role to fill the role in January. We have a lot in in our plate, and good luck. Then I left a bit disappointed because at the end, you know, I I didn't mean to secure my job, but I was sure that I was enriching my CV anyway, so wouldn't be a big problem coming back to Brazil to find another role. But ideally, I. Would have this secured, and then when I come back months later, I decide to to give a call again to BAT just in case. Look, I'm around again in case in the future shows up any other vacancies. I didn't know how long it would take for me to find another job, and then they ask me immediately, "Are you available to come tomorrow? I said yes, so it was much faster than I thought, and and then I found out that one of the two that they have finally selected in the eve to start the the job, they they decided to go for investment bank because he also was select for investment bank and the vacancy was vacant. Since then, they didn't reopen the process again, and was there waiting for me. So when I call back, they immediately fit me in the role, and then I start from there. This was 34 years ago.

Kingsley Wheaton
Did you join in finance, or was it more generic as a trainee program?

Tadeu Marroco
Yeah, no, as a well, there was no was equivalent of a global graduate type of grade, but not a global graduate because global graduate at that time in Brazil in BAT was just in marketing, and trade marketing. So finance we didn't have the program at that time, but I joined really really in in that level and then start you know moving up from there, and what I like most about finance is the fact that I worked in matrix in a number of different functions throughout my career, and also in BAT. I spent the first 10 years of this 34 in Brazil, and I work in the in the leaf department, in trade marketing, marketing in operation, factory finance. this gave me a kind of a massive business acumen because I could understand the business in in different aspects, and and this was really really important for my future career.

Kingsley Wheaton
All right, let's let's let's let's get over the hump of you know Chief Executive. So what are we talking? May 23, three and a half years now. That's

Tadeu Marroco
right. Yeah, that

Kingsley Wheaton
must have been quite a moment. I mean, 31 30, 30 years after you joined as a graduate trainee. Effectively, you know, you get offered the role of Chief Executive, and off you go. How was that?

Tadeu Marroco
Well, a moment of proud. There is no doubt. A moment that all these thoughts about recognition, about this worth all the you know the hard work, the dedication, and when you spend so long in a in one company, you is more than the professional. It's more actually there is a kind of personal, and you want, and then you are in a position that you can really influence in the in the in and leave a legacy that you can you can you have learned across your career and can make a difference. You know, and all those things came to my mind. Obviously, the first thing that I was focused on is and I'm still is on the culture of the company because for me is the foundation of everything, and I thought a lot of opportunities for us to revigorate the culture of BAT, make it much more collaborative when people have, I would say, not very peace of mind to speak their minds, give their opinions, and without being concerned of being, you know, in dispute of any other different views, be the boss or Appears where authenticity is something that is is is valuable. I'm not a ego person, so and and I would like all these characteristics to to flow and be evident. No, because what's happening as we transform the company the way we are transforming. We need more also mid-career recruiters, and and we need to to make their environment as more conducive as possible for them to feel the in at home and and be able to contribute. And and also we have to be prepared for their contribution.

Kingsley Wheaton
Yes, absolutely.

Tadeu Marroco
That's all those things comes together into a culture that is is more collaborative. So I was very keen to to highlight these points about what are my values and and one of the things that I I want to do in the one of the first movements exactly to galvanize the organisation at that time, making sure that we have select the right values of the company and start to spread in what we mean about the values, and not a kind of list of words in a in a hanging a wall. And because more important than the words is how you leave the values. Yeah.

Kingsley Wheaton
Now I I know this because I was there. So this is a good story, you know. I think you called us together about 10 o'clock on the first Monday.

Tadeu Marroco
That's right. Yeah.

Kingsley Wheaton
Many listeners might be expecting that you were, I don't know, going to lay out what you wanted to do, what you wanted to achieve, or what did you talk to us about?

Tadeu Marroco
I said to all of you exactly what my values are. Yeah, that's right. And that's exactly how we start the conversation. My first conversation, CEO, to that's right. To our management board and and all those things about you know authenticity, egoless, and things about integrity. It's not about what, but how you achieve that. No negotiable in terms of being responsible and and you know in a in a summary way treat others in the way you want to be treated.

Kingsley Wheaton
Yeah, not

Tadeu Marroco
Really really not that that difficult or at least articulate if because if you do that you are halfway there.

Kingsley Wheaton
Yeah,

Tadeu Marroco
And these are the points that I felt that were more important.

Kingsley Wheaton
Yes,

Tadeu Marroco
because with that, I think that people would understand what type of dynamic I would be expect to leave in the our measurement team and and how we would like to cascade this down to the rest of the organisation.

Kingsley Wheaton
Yeah, I remember it. I remember it vividly, like it was yesterday. It wasn't yesterday. It was three and a half years ago. How's it been? What? What? What? I don't know whether what's been better, what's been worse, what's different. You know, but sort of versus what you might have thought versus how you feel now. How? No,

Tadeu Marroco
obviously, something like that. You don't change from night to day, but there are a number of people that had left BAT before I joined as a CEO because they have their own, you know, perspectives that the company was maybe not going the in the direction that they were waiting for, and and they were back because of what they have heard in terms of the chains, and we see new joins also, you know, after you know six months one year in the group, being really being with a lot of positives experience after joining from outside, which is all very supportive of the direction one should take. Obviously, there is always a lot to be done, but I think that definitely we are in the in the right space on that and the right direction.

Kingsley Wheaton
Yeah, and and and your own personal experience because you know you've explained I think brilliantly how well you prepared you were, but still you know that first first day, first week, first month in the hot seat, you know chief executive, you will have learned so much. You know, what, what, what, what would you think of as you're learning, or maybe what would be your best bits of advice to a to a to a new CEO?

Tadeu Marroco
Look, my advantage is coming from the CFO role. I had the all the connections with the investors, analysts, obviously. So this is a is a is a they were stakeholders that a number of them I knew for a long for some time already, and so I didn't have to go through this learning curve. Obviously, as a CFO and being before the the head of transformation. I was responsible pulling the strategy together, so I didn't have to spend a lot of time on the strategy because I was pretty much aligned with the strategy. So I spent my time in how we had we could sharpen 

Tadeu Marroco
execution of the strategy, because I had to say my opinion success is 5% strategy, 95 execution.

Kingsley Wheaton
Interesting, 5% strategy. Yes, 5% 95%

Tadeu Marroco
execution.

Kingsley Wheaton
Interesting.

Tadeu Marroco
So, and I put a lot of focus on the on the first few days, sharpening the execution, and that's where those pillars came through. Yeah, and giving some line of sight to the rest of the organisation, and obviously you-it's all about people, no. And I had to make some change that I did in the first month in the job in the management team. And if you if you look back, we have 14 people, including me, in our management team over this last three years and a half, including me, we nine of them are either new in the role, new in the mansion board, or new to BAT.

Kingsley Wheaton
Well, so two two thirds of the has turned over since turnover

Tadeu Marroco
in a way, shape, or form.

Kingsley Wheaton
Yeah, and which

Tadeu Marroco
is also a way for us to balance expertise from within, but also different perspectives that we get from when we have people join with from different industry and and different experiences as well, which I thought that was very valuable. So, so my first few days, my first the first you know advice if I have to give one is people feel. People, people, because at the end of the day, this is where all starts, and not thinking more about have a proper discussion if you don't have a proper strategy, and I personally like to to I'm not impulsive, so I I like to listen. So I think that you should listen a lot when you go in place like that. Listen to what the people are saying. Look in in in all parts of the organisation. If you are new to the company, you have to travel around, try to identify what are the issues are, the opportunities, and then we come to a point in time where you have to make a call. And once you make a call, that's the needs to be the right call. You shouldn't be spending time thinking about the alternative. You made the call, you move on, and then you execute in the best way possible.

Kingsley Wheaton
Yeah, yeah.

Tadeu Marroco
So listen, digest, make a call, and put all your energy in executing the call with the right people.

Kingsley Wheaton
Well, let's get on to the strategy, shall we? Predominantly smokeless world, BAT, you know, old-fashioned cigarette company transforming. Why? Why is that transformation so important? And actually, what is that transformation about?

Tadeu Marroco
Well, first of all, I think that everyone. of us wants to have purpose and meaning

Kingsley Wheaton
in a

Tadeu Marroco
in a in our personal lives, yeah. And we came from a very controversial industry, very successful financially, but with an elephant in the room, which is the product being being sold and in a way, bringing harm to to the to the to who consume it. No, and and and for a long period of time, we couldn't do much about that. Obviously, people aware of those risks and and and decided still to to use the product, but ideal in the ideal world, you would like to offer them the possibility to enjoy the product without all these risks that was carried by our our main product. You have also consumers' mindset that has changed because you are in an era today that have become a top of mind. You see this in different trends: less sugar, less alcohol, and and people, you know, going to gyms and all that. And obviously, I think that there is a coincidence of us being able then to offer for those who wants to carry on using nicotine for way of doing that. And this is how compare with cigarettes, and and this is how this whole transformation translates. No, and the purpose of having this massive potential positive impact on society, if we if we are able to execute, is the best way possible, and then comes back to the execution side of it.

Kingsley Wheaton
Yes,

Tadeu Marroco
yeah, which is obviously us trying to mobilise ourselves with all the resource we have in order to do that, and that's what we have been doing. Yeah,

Kingsley Wheaton
but the Americans have a phrase, don't they? Walking and chewing gum. You know, I mean, I've been there with you and many of us, you know, this trying to go from a sort of you know we've always done this business to suddenly multi-category different formats. You know that that that has quite big challenges, doesn't it? It

Tadeu Marroco
is because it's a completely reinvention, starting with capabilities,

Kingsley Wheaton
right?

Tadeu Marroco
And because, for example, we were in a very traditional mono category business, commoditised business in a way, doing that for 100 years in a very successful way, and all of a sudden your competitive landscape change, your your need to innovate changed dramatically, which means that you have to find new partnerships in order to be able to innovate. You have to be careful or mindful of patents, which is something that was not in our data before. You can you you you you need to to step up your capabilities on the digital side because you have direct to consumer. You have how you communicate your products, and in a very different way, you have to step up your science because you have to to have a proper evidence-based scientific evidence-based debate with stakeholders, of

Kingsley Wheaton
course.

Tadeu Marroco
And and these are all new capabilities that you have to put together, and you have to transform and perform at the same time, all at once.

Tadeu Marroco
It's not a one or another.

Kingsley Wheaton
Yeah, yeah.

Tadeu Marroco
No, and which makes things more interesting. Let's put it in that way.

Kingsley Wheaton
I mean, the investor is always. You talked on the dividend earlier. Is it 2027 years, 28 years of of dividend? Yeah, depending.

Tadeu Marroco
Yeah, is it something like that? Is that is that more than three decades? Yeah, and I mean that

Kingsley Wheaton
you can't you can't just walk away from that, and so you'll perform and transform at the same time. Do I think you touched on innovation today? I think innovation is sort of the lifeblood of the new BAT. Is that what is that the beating heart of the business?

Tadeu Marroco
Yeah, I think that when you think about the critical path for BAT moving forward. Definitely, innovation is is is up there in the list, because you you have to to well you you enter in a space even with you know that is reserved to consume electronics if you want you know with devices and all that, and and not just about these inhalation products, but also the pouch that we're referring to. There is a lot of there is a lot of nuances in the pouch. A lot of people think that is a very simple product to produce, but it's not. And there is a lot of you know technology involved on that. So innovation, technology, which is not just in your products, but how you serve your product, how you you you manage product lifecycle management, your rhythm of innovation, and so on so forth, and and regulation. Because in our case, we have been a very highly regulated company. Yeah, will be still the case moving forward, and but I think that these are the critical three critical paths: innovation, technology, regulation. Well, let's just talk about a couple of those. How does a company get better at innovation? How have you seen BAT get better at innovation? Well, well, the quote I saw early on is that for us to develop ourselves into a space that we didn't have any expertise before from scratch would be very costly and very timely. So it would take a long time for us to do that. So what we did, we create strong and exclusive partnership with the likes of BYD, which is you know you know is a leading EV, but they also have BID Electronics, where the connection that we have mostly is with BID Electronics, and in Smooth they lead in IROSO in the world, and what it does for us, they basically double the amount of R and D that we spend today. So, and when you put together our own R and D efforts working in tandem with their own R and D, we have an equivalent of 20% of our revenue in that business being spent in R and D for future pipeline, which is the likes of pharma. We create today a very, I would say, powerful ecosystem, innovation ecosystem that will suit us very well for the years to come. Because now we are discussing not not just what's coming in the next 12 months, but more important what's coming in 18 months, and you know, two or three years down the road, and we are able to do that because we have this ecosystem working nicely. But obviously, when you are dealing with innovation, you also have to change your mindset because there will be some of those initiatives that will fail, will not succeed, and I don't think that there is any wrong with that, but you have just to to learn that the mistake and and and move on very fast.

Kingsley Wheaton
Yeah, learn and

Tadeu Marroco
move on. Yeah, and try again.

Kingsley Wheaton
Yeah, and try and fail a bit less next time, and fail less. Yes, that's right. And those, you know, those innovations have have got to land somewhere. You touched on regulation, something that I know has been central from firsthand experience to your leadership. You know just the importance of regulation. Why? Why is that so important to our business?

Tadeu Marroco
Well, because this is basically the right that we have to operate. You know, and and we cannot do all this transformation alone. We need the the governments, we need the stakeholders, the public health stakeholders, coming together and having a cohesive view on this. And that's the reason why, first of all, when I came in, I was very clear that we have to have a front-footed approach on that. We have to take the lead on those discussions, and and those discussions need to be based on science evidence,

Kingsley Wheaton
yeah,

Tadeu Marroco
and not a best guess. And and there are fortunately more and more examples in the world today where you can deploy smokeless products, for example, that result in reduction of incidence of smokers, and you can see some positive impact on on health indicators. And so we had to augment, exacerbate those examples, and and and have a proper discussion with those that could properly regulate those products to get them in the right of the right people. We don't want, for example, youth assets to these for these products and needs to be regulated in a way that avoids the youth and today we have many different ways of doing that. Be restricting how you sell this product in a kind of resale retail license. Be through technology, for example, age verified device or scan device be on the regulated self in terms of establishing minimal age type of you know the senior of content in in how you you you deploy the products that not makes appeal for youth in terms of how you package the product type types of flavours. So there are many variants to that, and we want to be able to discuss this and and and and make positive contributions in that sense with all the experience that we have, and this is our license to operate and and execute in essence the the ambition that we have to get to a position where 50% of the revenues of the company by 2025 is coming from out of cigarettes. Yeah, yeah.

Kingsley Wheaton
And by contrast, there's some regulators who are not doing a great job. I know you never love it when I bring up Australia, but yeah, well, you know, I mean, there's some poster child's for how how not to do it out there. What 

Kingsley Wheaton
you know how how do you reflect on how the science and the evidence doesn't get through? Do you think it's ideology? Is it dogma? Is it people not listening? What's the

Tadeu Marroco
yeah? I think there is a bit of this. I clearly see this how you can consciously take some my misguided policies and not see the consequence of that, and because at the end of the day, what matters most is how these whole policies impact the the consumers. You know, and and when you see cases in Australia, for example, when they open up the Pandoras box of a delicate that today between vapour and cigarettes, it's the vast amount of nicotine consumption easily three

Kingsley Wheaton
quarters, 75% maybe 80, some year.

Tadeu Marroco
So cannot cannot be right. No, it's it's common sense. No, it's not. It's obviously reflecting the tax collection that basically disappears, and but it's also the assets that you make in in a product that you exactly want to avoid. You just facilitate these assets because you make it more affordable because it's illicit because it's illicit. You don't pay tax. It's cheaper because all the criminality that comes together, because these networks that form itself to bring these products, they also bring drugs, they they bring weapons and all sorts of of dark activities, and it's so clear that, and so it begs the question, no, in terms of why we we are still in in that position, no, and so I think there's a bit of dogma. Is a thing of inertia,

Kingsley Wheaton
and

Tadeu Marroco
and and you know, and it unfortunately we have to highlight those cases because they are as important as the successful cases, and because fortunately it's not all those extreme cases, and you are seeing more and more governments get it right, and Sweden is is a typical example of that, where you know the incidence of nicotine use is primarily coming from a product that there is no inhalation, there is no more and more no tobacco because a lot of of the oil now consuming in in in Sweden is coming from modern oral our the product that we were talking about, and you already start seeing this in the statistics. So it's a it's a we have to bring it into light, and that's exactly the the role of Omni. You had a massive, you know, leading role on that, which I think that is a fantastic job. And we are in the in a in a in a very you know testimony in the new launch of the new the new version. 

Kingsley Wheaton
Well come back to that. We've actually got it right there, you know. I'm not sure when this is going to be broadcast today. I think it. Anyway, it was launched recently. There we go. It was launched recently. Omni 2.0. I'll come back to that if I will. So innovation regulation. Just want to go quickly back to culture. Because you talked about people and talent, and you've been, you know, I know how important you think it is. 34 years later, could you, could you somehow, you know, describe the culture of BAT, or certainly through your own lens, what you what you think of that?

Tadeu Marroco
Well, what what I love in BAT is a truly multicultural company. No, it's in our head office. You get there. You have 88 80 different nationalities.

Kingsley Wheaton
80 80 in the head  office.

Tadeu Marroco
Yeah, in head office. So it's a. I I love that. I really really enjoy this multiculturalism. If you if you want, it's a company that is more and more collaborative, and and the only reason why I could make a very early entry point position in Brazil towards the CEO of a PLC UK company is because I found a lot of people willing to help me in all the roles that I was stepping up to, and explaining to me. And the only reason why I got to where I get got to is because of that. Yeah, and that's what I really admire in in the company.

Kingsley Wheaton
Very interesting. Was I think it was you telling me about your first day in the canteen in Rio? Yes. Didn't you make a mistake or something? Well, yes. To tell that story, it's very funny.

Tadeu Marroco
Before lunch, they tell me, "Look, you have to call this number here, and they give me the extension. And you, and you, because they will give you a menu. Yeah. And then you have to select what you have for lunch. I say, "Okay, so okay. So I go there and I call, and then obviously there is someone ready for the whole trap. No, now what do you want? Today we have a shrimp. Today you have a lobster and oh you know subsidy. I said wow my goodness this is a really yeah yeah it was in my 20s and oh that's why wow that's a fantastic cop. I said no, and then I choose. I don't remember what I have chose. And then I came down to the canteen. So all of them was

Kingsley Wheaton
literally day one. Yeah, day one. And I

Tadeu Marroco
came down to the canteen, and all of them there in a in a around the same table. Yeah. And then a lady now came and put whatever is the food there in front of you.

Kingsley Wheaton
Yeah.

Tadeu Marroco
I said no, no, that's not my food. I send it. I order something else, and then she looks to me and say, "What? What? That's what you have to eat. And then I look around, all the other guys laughing and all that. But then in the second day, I was I was having lunch, and and then someone that looks older than me, very senior, and then he sat in the table and start asking questions about no what which department you are working on. No, and then he start. I was sit just beside him, but he start in the other side, and then when comes to my my my my time, he asked me. I said, "Look, I just started two days ago, and so on and so forth. And then someone came to talk to him, like his secretary, and then said, "Look, you have a meeting now. Someone's calling you. Have to leave. And then they said, "Sorry, I have to leave. I would reply back the gesture saying, "And what about you? Where do you work? Yeah. But he was the president of Sol Cruz. Yeah. Would it be an embarrassing question if I had to ask. 

Kingsley Wheaton
okay. Look, let's try and bundle a bit of this together. Let's sort of Omni, science, evidence, tobacco harm reduction. You know, the viewers of this are quite familiar with it. I think if I was to go back three and a half years ago, you know, you were a massive proponent of the science and the evidence, and I wouldn't go as far to say as that surprised me, but perhaps the volume that you wanted that at, you know, is that the is that the engineer in you? Is that the sort of logic, the rational? Is that is is that what inspires that stance? Do you think?

Tadeu Marroco
I think so. I think exactly that because and there is this, and and also let's face the credibility of the tobacco industry is not the highest, and so there is a lot of scepticism of whatever we say, and we cannot look back and and sometimes I get some of the question of the past. I say, look, I cannot look backwards. I just can look forwards, and what we do from 

Tadeu Marroco
and this with my engineer heart has put. I was very very clear that without evidence, the discussion would be really hard for us. 

Kingsley Wheaton
Yeah, that's absolutely right. And now, well, I think I was 100 new content pages, 16 new chapters. You know, we've got the latest edition. It's it's two years old. Probably, you would agree with me that when we first started talking about Omni, which was probably 23 24, I can't remember. Might not have. There was a podcast, you know, in the middle of that mix. Somehow, you know, I suppose my question is, you know, you know, you talked about innovation. Do you also believe? And I think there's other parts of the business. You know, it could be treasury, it could be tax, you know, any of the sort of more professional services. Do you also think there's a there's a role for innovation and and and sort of you know game changing activity in in all of those areas. How important is that?

Tadeu Marroco
Yeah, I think like that is important that we keep this mindset of always looking for better ways of doing things, and this has always been the north of what always I try to do. I never lost an opportunity in a new role. Never. Yeah. I always try to take advantage to bring, you know, something new. And it's it's not because I find myself genius. It's far away from that. But when you are new in a role and you are bringing different perspectives, you are in a position where you have new ideas, obviously, but the environment also change, and the environment today is changing so much. So things that was not able to enable few years ago now is possible, and with things like AI, for example, and and new medias, for example, podcasts. I love to to listen to podcasts, and congratulations to to your podcast because it's a is a is a. I I love to to to listen from different subjects. It's something that gives me peace of mind, and I find it interesting. And all I'm walking and all that because it's easy to hear from your pods and all that, so it's a and and and the technology will bring some more and more opportunities to do things differently, and that's why I was obsessed to get every single employee in BAT that has a compute in front of them with access to AI.

Kingsley Wheaton
Yeah. 

Tadeu Marroco
I was obsessed, and I am obsessed with that, and and you see the traction that is gaining across the organisation is the by far the the the training that attract most attention of of BAT history. With we have to multiply by 10 the numbers of vacancy in every type of training slots that we have,

 Tadeu Marroco  37:22  

 

The amount of agentic AIs that have been created by employees, working groups, and so on. In in the chat BAT that we have created, the access to via tokens to more sophisticated AI tools, and and this is self feeding itself, you know, because the employees being trained? They are also very interested, and and and you are seeing more and more new ideas coming through. Yeah, and and we have to nurture the sort

 

Kingsley Wheaton
of flywheel, really.

Tadeu Marroco
Flywheel. 

Kingsley Wheaton
I remember you. You, I think early on when we were working with you on the the new strategy, I think used data driven, technology led, or something was sort of I think how you used to. I think it's a sort of a CEO question for those people listening. You know, there must be a lot of times when you sort of ask for things, you kind of know what you want, but you may not quite know how to do it. If that, you know, there's a sort of an, you know, you must have had to be committed to that direction. Is is that right? Is that you know the and I think you know we talked a lot about proactivity very recently. You know, I guess you're looking for people to bring solutions.

Tadeu Marroco
Yeah, look, we because we talk a lot about empowerment, and obviously I'm the first to to to want to empower as as many as as possible. I think it's the right thing to do, but empowerment comes with responsibility, and and sometimes people confuse this with with well, if I'm facing some challenge, and by the way, who is not facing challenge today? No, there is it's very difficult, and I can you know just you know explain why I'm not able to deliver what I'm supposed to deliver. That you know is maybe it's good enough. It's not, no, because what I'm expect from you is more than explaining why you know I to deliver. I'm explaining what what is the alternative for not delivering. And the only way of doing that is being proactive, trying to anticipate the problems that you might face. Yes. No. Because because if you don't anticipate the problems, it's just a waste of time to address effectively the problem. So before the tragedy happens, it materializes itself. Yeah. Avoid the iceberg. Avoid that. And and if you are not able to to create a solution alone. You raise your hand and help. Ask for help.

Kingsley Wheaton
But if you're sitting, you know, you know, CEOs, even senior elite, they can be a bit scary sometimes. You know, you're a junior person in the organisation. You know, what advice do you have? I mean, it's quite difficult, isn't it, for people sometimes to, you know, is there a way of saying it? Is there how. How do you bring the bad news? I suppose. Yeah.

Tadeu Marroco
No, I think that that's where the culture is so important. Yeah. Because you have to create this atmosphere where people should be, you know, fearless to bring bad news. Yeah. And and be able to provoke a discussion around those those topics. No. And because if you have a fearless, a fear, a culture of fear, nothing of that happens, and then you are just hiding the problems that you're going to explode one day, and these you learn observing things that's not working, because I had throughout my career, seen these as well.

Kingsley Wheaton
Yeah, 

Tadeu Marroco
I haven't seen everything perfect. You know, I have worked with very difficult managers. I I remember once one of my roles, the first day of my boss come to me and said, "Do you know? And then about someone, I said yes. I fire him. Do you know? And then the name of someone else. I move him out because he was not doing the job. Do you know? And then I just hearing that. So that was his way to introduce himself. Like if you don't do what I'm expecting you to do, you're out. Then

Tadeu Marroco
I wait for him to finish all that, and then I ask him, "How can I help you to succeed in what you have to do? I'm here to help you. How can I be the best help for you? Then you disarm him.

Kingsley Wheaton
Yeah, you see what I mean? Yeah, yeah.

Tadeu Marroco
Instead of confront confronting him because he's your boss anyway, and you're going to have good boys and bad boys. Let's face. No, that happens everywhere. No, you are not really choosing that. No, try to create this relationship. No, you disarm him because at the end of the day, if you do the job well, you are helping him in a way. Exactly.

Kingsley Wheaton
Yeah, yeah, yeah. And

Tadeu Marroco
and and and and that's the way, by the way, for you to progress.

Kingsley Wheaton
Yeah. Instead of

Tadeu Marroco
imposing, I want to work from here there. You just do your job.

Kingsley Wheaton
Yeah.

Tadeu Marroco
And if you do it well, people will realise that they can trust you.

Kingsley Wheaton
Yeah.

Tadeu Marroco
And they, when they decide for someone else to do a different job, they will remember you say, well, but I want that individual because I know that he will deliver.

Kingsley Wheaton
I want

Tadeu Marroco
him. I want her. And then you put there. You see what I mean?

Kingsley Wheaton
So there's a kind of. I think the advice is sort of you know think through how you're going to bring the problems. Yeah. There's a kind of get to know the get to know whoever it is. You know, there's a little bit of stakeholders are all different. They all take things. Yeah, it's it's it's it's it's very very interesting. I I wanted to just quickly go back to technology and AI. Everybody's everyone with a computer has got AI. You know, I think even by some big tech company standards, you know, we've made tremendous advances in in technology and AI. Maybe the superficial view is we're a 125 year old business, nearly maybe some outside people, bit slow moving, bit old fashioned. I think that's an unfair reflection, isn't it? Now you know, AI technology, podcasts, digital capability. I'm not saying we're perfect, but you know, it's quite a different BAT.

Tadeu Marroco
Absolutely, and and I think that this hasn't been considering full, and I think that will come across as as we progress. But we have evolved tremendously over the last few years, and the direction of travel is very clear in that sense. I do I do believe that this will be the building blocks for for the BAT for the future.

Kingsley Wheaton
Like I said before, and we have to to to make it the place to be, and that's exactly what my my vision is. I'll crunch some of this together. So about 20% of the group now is smokeless revenue. What are we? 2026. 

Kingsley Wheaton
I think there's a capital markets day coming coming up, so I don't want to steal any thunder. There's probably some things you can't say. Predominantly smokers. That means what half of our revenue by 2035. What what sort of business is BAT then? When we're successful with the transformation, I mean, you know, in the old worlds, we pejoratively we were big tobacco, weren't we? Can't really be a tobacco business if more than half of it's not tobacco. How do you how do you see that 2035 BAT?

Tadeu Marroco
No, I we we should be thinking about BAT in the medium term as a stimulant company, right? That's the vision I have for the company.

Kingsley Wheaton
Interesting.

Tadeu Marroco
Where nicotine, you want more stimulants? Is a not the one you want?

Kingsley Wheaton
Okay, interesting. Yeah, and and we

Tadeu Marroco
already start to work on the foundations for this vision to materialize.

Kingsley Wheaton
So that would mean the sort of you know there's a role. Beyond nicotine, further on. So, so nicotine's today's stimulant, if you like, that's our legacy business. Yeah, and then you think there's a frontier beyond that.

Tadeu Marroco
Yeah, and there is more and more products on a well-being stimulation, this enhancement daily function, and you know, I myself take some of those products, L-theanine, with you know, give me more focus and more.

Kingsley Wheaton
Does it work? You think it works?

Tadeu Marroco
It works. Yeah, for me works. But you see more and more of these products to give you energy. So you know, for you before you work out and and when you wake up, and you see more and more of this type of product, we are a company that reach out to 11 million point of sales on a daily

Kingsley Wheaton
11 million point of sales.

Tadeu Marroco
Unbelievable! So it's unbelievable. So we are spread across more than 140 markets worldwide. 140

Kingsley Wheaton
countries.

Tadeu Marroco
We have a you know millions of touch points every day with million of consumers, so we can leverage that capability. We know how to build brands. So when you pull all this together with science and all that, you were talking about BAT Brazil as a powerhouse. That you know, we have powerhouse in Pakistan. We have powerhouse in Canada, so it's a lot of of a of a you know excitement around BAT. The US is is thriving. Yes, is doing extremely well. It's the fastest nicotine growing company today in the U.S. So there is a lot of good people and capabilities that we have tap on, we can tap on to transform this group into a stimulant company, and when nicotine is one of them. So, I think that that's the vision that we should have. What

Kingsley Wheaton
are you know? What did you touch on there? Route route to market, route to consumer, geographic reach, ability to manage regulation, brand building. I mean, you know, and then you put this people culture.

Tadeu Marroco
Yeah,

Kingsley Wheaton
it's an exciting future. Do Do you think you touched on the US as well? That that presumably starts to come together in the in what I suppose is the cornerstone of BAT is the US business.

Tadeu Marroco
Absolutely, talk a little

Kingsley Wheaton
bit about the US business. Maybe people might be because, of course, we're called British American tobacco. People might not quite know how big US in. 

Tadeu Marroco
Look it's a 50% of the company financially speaking, and we know well is the by far the largest and most valuable nicotine market in the world is by far the biggest vapour market in the world. Is by far the biggest modern oral market in the world, and and we have a massive capabilities with Reynolds and you know and and and a very talented people on the ground, so I think that is a is like you said, it would be the driver of growth of BAT moving forward.

Kingsley Wheaton
And I don't think it's a secret. wasn't always that way, was it? I mean, things didn't look quite so good in the US when you became CEO.

Tadeu Marroco
Yes,

Kingsley Wheaton
I think that links with your execution point and just sort of reflect a bit on. 

Tadeu Marroco
That's  right, and when I mentioned the sharpener execution was exactly addressing the pitfalls that we were facing at that time in the U.S. and this passed through a completely renewal of the leadership team in the U.S. and and which leads to a renew execution in

Kingsley Wheaton
the U.S.

Tadeu Marroco
So you you you see other companies that they are very strong in the U.S. but not as strong as Reynolds in the U.S. Yeah. So we have a very strong combination of Reynolds and BAT, and what is exciting for the future.

Kingsley Wheaton
We we haven't talked about our other categories. I don't want to go into detail, but you know you've talked a lot about modern oral you think do you think the future is one where modern oral is a bit of a star? You know, if things go well in terms of regulation and innovation,

Tadeu Marroco
I think that well, going back to my rational mindset, is a category that there is no inhalation. Is a category that has no tobacco. In terms of the risk continuum, it the lowest relative risk compared with cigarettes, vapour, HP, and so on. Traditional oral products that have tobacco need and so on and so forth is affordable. You don't need to buy a device. Top line is about growing the category, and that's exactly we are doing new categories. It became we were in a loss making because we decide to, to I would say, created three big global brands at the same time. Because we always saw since the beginning that this would be a multi-category need. Because the policies, the the regulation is different. Consumer. Taste profile is different, so would never be a one size fits all. Yeah, yeah. And what we are seeing today is more and more poly users as well in this category. So we were absolutely right on that. But obviously, was a was a strategy that was very costly because we had to develop all these capabilities and brands of all the categories at once, and and took more time to be implemented. Then we reach a break-even position when I was come as a CEO in 2023.

Kingsley Wheaton
Yeah,

Tadeu Marroco
and and now we are in a half year results in 14% category contribution. So we are really focused on getting traction, double-digit growth on the top line of these categories, at the same time improving our category contribution. So we are in a in a in a in a in a much more sustainable trajectory in this new phase of the transformation, which is the beauty. Of course, at the end of the day, we start talking about how much the impact you can have on public health, migrating smokers that still want to use nicotine towards these smokeless products that, compared with cigarettes, has a different risk profile. Let's put it that way: a much different risk profile, and at the same time, you have a business that becomes much more sustainable over time.

Kingsley Wheaton
I do want to get onto my quick-fire round. This is technically you're supposed to answer one or the other. Yeah. So I'm going to give you some choices.

Tadeu Marroco
Okay.

Kingsley Wheaton
Quite a lot of the guests try and wriggle out of it, so you know, you know. Let's give it a go. Big football fan, by the way. Yeah, Arsenal fan.

Tadeu Marroco
Arsenal fan. Yeah, you know how the story. Yeah, yeah.

Kingsley Wheaton
How did how did that come about?

Tadeu Marroco
Well, look, I I moved to 2006 today. Okay, I really didn't follow Premier League at that time,

Tadeu Marroco
and then I had a friend that invite me to attend a friendly between Brazil. I think that was actually England in the Emirates.

Kingsley Wheaton
And it was Emirates already. Yeah, because

Tadeu Marroco
was just brand new. I think that they finished 23 or four, something like that. And I was amazed by the stadium because you know 60,000 ish. Because every I have been the Wembley before, but the Wembley they depending where you sit can be really far away from the pitch, and in the Emirates wherever you are, you have a perfect view. No, I said well, I want to be more and more in this stage. I want to support this team, so it's us and all. So I start choosing the stadium before the team. So that's. But now I'm a big Arsenal fan.

Kingsley Wheaton
Okay. All right. Well, the first I'm going to do the quick fire. Yeah. So the first question is a football question.

Tadeu Marroco
Yes. Is

Kingsley Wheaton
Arsenal or Brazil?

Tadeu Marroco
Brazil.

Kingsley Wheaton
Okay. I thought you might say that. A musical or a movie?

Tadeu Marroco
Musical. Musical. Love music.

Kingsley Wheaton
Family. or friends,

Tadeu Marroco
family.

Kingsley Wheaton
London or Rio? That's not fair, is it?

Tadeu Marroco
Yes. Well, look, Rio is is is a is a nice place and full of problems, but is natural beauty and well, is the heart of yours? Yes. This

Kingsley Wheaton
is interesting. Fine dining or home cooking?

Tadeu Marroco
Fine dining.

Kingsley Wheaton
Okay. Good book or Netflix?

Tadeu Marroco
Good book is a better.

Kingsley Wheaton
Okay. FT or Economist?

Tadeu Marroco
FT.

Kingsley Wheaton
Yeah. And weekends or Weekdays.

Tadeu Marroco
Well, depending if a day. Well, there are some days that I prefer to have. Yes, and look, I think that you have to have both to balance out. No,

Kingsley Wheaton
yeah, yeah. And you strike me as someone who still loves coming to work, which is the main thing. All right. Look, I was going to ask you all sorts of other things. We haven't got time. I was going to ask you advice you'd give to a younger Tadeu. I was going to ask you about your family, but I think we've covered a lot. I've just got one real final question. One of the interesting things on the podcast that surprised me is the internal guests are really popular. We've had Danny Tower, our head of scientific affairs, Valm Marius. We had Pascal. Obviously, you're the you know you're the most significant of those guests. But I thought maybe you'd like to leave a final message for all the people at BAT.

Tadeu Marroco
Yeah, look, this is a company that I love, and I think that I have been, like you said, 34 years in the company is the most exciting time ever that I have been. There are plenty of opportunities, and and the only message to all of our BAT colleagues is to. Embrace those opportunities and enjoy the run because it's a fantastic company, like we discussed, and full of meaning, full of purpose, and and and be happy. and And thank you very much for having me

Kingsley Wheaton
here. Was

Tadeu Marroco
a really enjoyable conversation, and I see you back in the afternoon.

Kingsley Wheaton
Yeah, that's right. Goes quite quick, doesn't it?

Tadeu Marroco
Yes,

Kingsley Wheaton
it goes quite quick. Well, today, thank you enormously on behalf of all of BAT and actually all of our stakeholders for coming here. Those of you are watching it, do repost. You know, get get it out there. But today, thank you so much for taking the time to come here and and and and talking to us about the challenges of BAT, the challenges of being a CEO, but also the opportunities. Thank you,

Tadeu Marroco
thank you, thank you, please.

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