BAT in talks to end Kenya’s ban on nicotine pouches

By BRIAN NGUGI
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Summary

• BAT Kenya’s British parent company BAT Plc disclosed Thursday the Kenyan unit had stepped up talks with the government to address a regulatory dispute that has halted the sale of the nicotine pouches, which trade locally under the Lyft brand.
• BAT Plc has in recent years been diversifying from cigarettes in response to flagging sales across the world.
• As part of the global strategy, Kenya was chosen to host a plant for production of non-combustible nicotine pouches targeting the African market at an estimated cost of Sh2.5 billion.

British American Tobacco #ticker:BAT (BAT) Kenya has opened talks with the government seeking a reversal of the ban of its newly introduced nicotine pouches in Kenya.

BAT Kenya’s British parent company BAT Plc disclosed Thursday the Kenyan unit had stepped up talks with the government to address a regulatory dispute that has halted the sale of the nicotine pouches, which trade locally under the Lyft brand.

BAT Plc has in recent years been diversifying from cigarettes in response to flagging sales across the world.

As part of the global strategy, Kenya was chosen to host a plant for production of non-combustible nicotine pouches targeting the African market at an estimated cost of Sh2.5 billion.

The nicotine pouches are placed under the lip so that the nicotine can be absorbed by the body.

“Pilot schemes in emerging markets are ongoing with some encouraging results in Pakistan and Indonesia. In Kenya, we have temporarily suspended sales due to local regulatory challenges and continue to engage with the local authorities,” said BAT Plc on Wednesday in an earnings update.

Last year, Health Cabinet secretary Mutahi Kagwe accused the Pharmacy and Poisons Board of flouting tobacco control laws when it licensed their sale.

Mr Kagwe had demanded the regulator provide the ministry with a “comprehensive report on the criteria used and circumstances leading to the registration and licensing of the product.”

Health ministry subsequently declared them illegal.

Raised concerns

The new Nairobi based nicotine focused factory, which BAT Kenya says is the first of its kind in Africa, was part of the group’s plan to follow the changing habits of tobacco consumers.

But the sale of the pouches was also resisted by lobbies, who want the new products heavily taxed and regulated.

The nicotine that is currently utilised in the pouches is produced in Switzerland and this has also raised concerns among tobacco farmers on the future of their produce amid assurances from BAT Kenya.