BAT sees deal over nicotine pouches

The British American Tobacco (BAT) Kenya Industrial Area plant in Nairobi. FILE PHOTO | NMG

British American Tobacco Plc Kenya is optimistic it will strike a deal with the Ruto administration over the regulation of the sale and distribution of oral nicotine pouches by the second half of the year, unlocking a Sh1 billion budget for the new category products.

Dispute over the appropriate regulatory framework has frozen the company’s plans for production and marketing of these products.

The publicly-traded firm completed the building of the pouches manufacturing plant in Nairobi primarily targeting the 21-member Common Market for Eastern and Southern Africa (Comesa) bloc at a cost of Sh1.5 billion more than a year ago.

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The project had been allocated a budget of Sh2.5 billion by parent BAT Group of London, with the balance earmarked for testing of the plant, marketing and distribution of the products.

“Commercial success [of oral nicotine pouches factory] looks aligned to our expectations and we have to continue working with the government to continue shaping both the fiscal [taxation] and regulatory elements that will allow sustainable marketing, sales and production of the modern nicotine pouches,” Crispin Achola, the managing director of BAT Kenya, said in an interview.

“We remain optimistic and we believe in the second half of this year we should be in a position to start producing out of our factory. Obviously, it is dependent on the several elements we have spoken to… ticking up.”

BAT started selling imported oral nicotine pouches –branded Lyft– in late 2019 after being registered by the Pharmacy and Poisons Board (PPB).

The sale was, however, stopped after the then Health Secretary Mutahi Kagwe questioned the regulatory framework applied by PBB.

Public health authorities as well as civil society groups such as International Institute for Legislative Affairs and Consumer Information Network have maintained the sale and marketing of the products be done under Tobacco Control Act.

That law requires that BAT’s new products be slapped with marketing restrictions such as promotions and advertising as well as use in public areas as is the case for combustible tobacco such as cigarettes and smokeless categories including electronic cigarettes.

BAT, however, maintains the new product is a safer alternative to combustible cigarettes which have been linked to an increased risk of contracting life-threatening diseases such as cancer as well as lung and heart diseases.

“We believe there’s [a] need to be a third category (in the Act) that speaks specifically to oral nicotine pouches, and that’s what we have advised the government,” Mr Achola said earlier.

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“This is a reduced-risk product compared with cigarettes. The excise tax paid on it … should be less tax than the lowest tier of cigarettes.”

The Finance Act 2022 raised the excise duty on non-combustible oral nicotine products by a quarter to Sh1,500 from Sh1,200 per kilogramme.

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