BAT Kenya has pegged local production at its Sh1.5 billion oral nicotine pouches factory on “less stringent” regulatory and taxation framework for the new category products.
Managing director Crispin Achola says an investment of a further Sh1 billion for testing of the plant, marketing and distribution of the nicotine pouches depends on authorities providing a facilitative environment.
BAT Kenya imports the non-combustible nicotine products, under ‘Velo’ brand, from other countries, particularly South Africa, despite putting up the factory in Nairobi.
“We reiterate the need for a balanced excise framework and pragmatic regulatory environment that fully enables adult smokers to switch to scientifically-substantiated, reduced-risk alternatives. Whilst not risk free, a growing evidence base suggests that alternative nicotine products such as oral nicotine pouches may present reduced risks compared with cigarettes, for smokers who switch exclusively,” Mr Achola said via email.
“An enabling environment will further facilitate economic growth by encouraging further FDI [foreign direct investment] into the country – key to commercialising our new oral nicotine pouch factory – into which we have already invested Sh1.5 billion of the total 2.5 billion allocated.”
The BAT Kenya chief spoke in the wake of the London-based parent company disclosing that controlled sale of the nicotine pouches – consumed by placing between upper lip and gum – has posted “positive early momentum” in Kenya after reintroduction last July.
The sale of the pouches attracts Sh1,500 excise duty per kilogramme from last July following the enforcement of Finance Act 2022, increased from Sh1,200 previously.
The current tax is, however, significantly lower than the Sh2,500 per kilo that had been proposed by the National Treasury before it was lowered by lawmakers. BAT has in the past, through the Kenya Association of Manufacturers, unsuccessfully proposed a duty of Sh757 per kilo.