British American Tobacco

British American Tobacco's 2024 results reveal an organism in mid-metamorphosis: combustibles revenue down 5.2%, New Categories up 8.9%, with Velo nicotine pouches exploding 40.6% while Vuse vaping collapsed 13% under illicit competition pressure (70% of US vape market now illegal products). This is punctuated equilibrium in business form—a company undergoing transformation between stable states while navigating the unstable transition zone. BAT projects 50% of revenue from non-combustibles by 2030-2035, requiring 3-5% annual revenue growth and 4-6% profit growth by 2026 to fund the shift.

The Velo success story demonstrates r-selection in action: US market share rocketed from 6.9% to 15.6% in six months (November 2024-May 2025) through rapid product proliferation and aggressive distribution. Velo Plus drove 384% revenue growth and 206% volume growth—fast reproduction, wide dispersal, opportunistic territory capture. Meanwhile, Vuse struggles against invasive species competition: illicit disposables are to legitimate vaping what kudzu is to native plants—fast-growing, regulation-resistant, and ecosystem-disrupting. BAT's August 2025 launch of VUSE ONE disposables represents fighting invasives with similar reproductive strategy.

The $6.2 billion Canadian settlement provision in 2024 exemplifies the predation cost of legacy business: combustibles face legal, regulatory, and social pressure that non-combustibles escape. BAT is executing controlled calving—deliberately shedding the high-revenue, high-risk combustibles business while growing the lower-revenue, lower-risk alternatives. The challenge is thermodynamic: combustibles generate massive cash flow that funds New Categories development, but killing the golden goose before the replacement geese mature causes organizational starvation. The $1.1 billion buyback commitment for 2025 signals confidence in navigating this metabolic transition without collapsing from energy deficit.