The world's second-biggest tobacco company, which started selling its Vype e-cigarette brand over the internet in Britain this week, intends to roll the business out to other European countries and the US, as well as on the high street.
"Our declared intent is to be the leading player in that business. The market is currently small and fragmented but showing movement, creating a buzz," Kingsley Wheaton, BAT's director of corporate affairs, said. "For us it's a natural extension of where we are trying to go in harm reduction. We believe it will create profitable growth over time"
Mr Wheaton was speaking after BAT revealed a fall in volume sales of cigarettes during the first half of the year, offset by price rises. The company, which owns Lucky Strike, Dunhill, Kent and Pall Mall, posted revenues of £7.57bn in the first half of the year, up 2pc on last year. Pre-tax profits were up slightly at £3bn.
BAT sold 332bn cigarettes, against 344bn in the first half of last year, as mature markets proved less lucrative, although sales rose in Asia. It said smokers were paying on average 7pc more for cigarettes than a year ago, due to a combination of price increases and consumers upgrading to premium brands.
The company became the first tobacco seller to enter the UK's e-cigarette market on Tuesday with Vype, a disposable electronic cigarette that turns liquid containing nicotine into a smoke-like vapour.
Richard Burrows, BAT's chairman, said it had "delivered another good set of results" in the face of "fragile economic conditions persisting in some parts of the world". The company said it is growing sales in terms of market share against rivals like Philip Morris, which is behind Marlboro, and Japan Tobacco International, the owner of Benson & Hedges.
BAT also announced that John Daly, its chief operating officer, would retire in April next year. Mr Daly, who has been in the role since 2010, has had a 19-year career at the company and BAT said it would not immediately appoint a successor.
Chief executive Nic Durante said: "John has played a huge role in the history of British American Tobacco, steering all the businesses he has run to outstanding results.
"He will be remembered for his love of the business and his commitment to the people in the organization. He leaves behind a true leadership legacy."
