British American Tobacco #ticker:BAT (BAT) East Africa plans to spend more than Sh1 billion ($10 million) to push oral nicotine pouches into the market once it gets the greenlight from public health authorities to resume domestic sale and distribution.
The maker and seller of tobacco and other nicotine products says construction of the oral nicotine pouches manufacturing plant in Nairobi cost 60 percent of the $25 million (Sh2.74 billion) allocated by London-based parent firm, BAT Plc, for the project.
The remainder 40 percent of the budget – $10 million or nearly Sh1.1 billion – will be injected in subsequent phases such as setting up distribution networks in 21-country Comesa trading bloc and enhancing capacity when the local production of the nicotine pouches, branded Lyft, begin.
“We have spent 60 percent of the $25 million to get the factory up to a position to start running,” BAT East Africa managing director Crispin Achola said.
“The only thing that’s remaining for us is to get back to sales and start producing the product. We are just waiting for the government give us a final shape.”
The publicly-traded company started selling imported oral nicotine pouches – consumed by placing between upper lip and gum – in the third quarter of 2019. The sale was, however, temporarily halted last October after Health Secretary Mutahi Kagwe questioned the regulatory framework applied by the Pharmacy and Poisons Board to approve the sale and distribution of the new product.
Mr Kagwe in February directed that the sale and distribution of BAT’s Lyft be done under the Tobacco Control Act after getting a “comprehensive report on the criteria and circumstances that led to registration and licensing”of the product from the drugs regulator.
The adoption of the ministry’s preliminary regulatory framework will see BAT’s Lyft products slapped with marketing restrictions such as promotions and advertising as well as use in public areas.