British American Tobacco Plc says the controlled sale of oral nicotine pouches is gaining early momentum in Kenya, boosting the firm’s plan for commercialisation of a local plant in the coming months subject to a “favourable” taxation and regulatory regime.
The local unit of the British multinational restarted sale of the new nicotine product category last July under the Tobacco Control Act.
The sale, which initially started in October 2020, had been suspended after public health authorities questioned their registration under the Pharmacy and Poisons Board (PPB), arguing they should fall under the same regulatory framework as cigarettes.
The new category products, which were previously sold under Lyft identity in Kenya, are sold under the Velo brand – the name adopted in other countries.
“In Kenya, after the category was reinstated as regulated under the Tobacco Control Act, we have reintroduced Velo to a limited retail universe with positive early momentum as we focus on driving guided trial,” the parent firm wrote in the latest annual report.
“We continue to believe that Modern Oral represents an exciting opportunity to offer affordable New Category alternatives to adult nicotine consumers in emerging markets, given the absence of an electronic device and a pre-existing ritual of oral product consumption in a number of markets.”
BAT Kenya relies on imports despite completing the construction of its oral nicotine pouches manufacturing plant in Nairobi primarily targeting the 21-member Common Market for Eastern and Southern Africa (Comesa) bloc at Sh1.5 billion.
The project had been allocated a further Sh1 billion for testing of the plant, marketing and distribution of the products, bringing the total budget to Sh2.5 billion.
However, disputes over the regulatory framework for the sale and distribution of the pouches have frozen the company’s plans for local production and marketing.
“To fully commercialise it [oral nicotine pouches factory], we need to have more confidence in the fiscal [taxation] and regulatory framework that is applied to these products,” Crispin Achola, the managing director of BAT Kenya, said in an interview last month.
“Commercial success looks aligned to our expectations and we have to continue working with the government to continue shaping both the fiscal and regulatory elements that will allow sustainable marketing, sales and production of the modern nicotine pouches.”
The Tobacco Control Act has put marketing restrictions on the new products but BAT maintains that the new product is a safer alternative to combustible cigarettes.