BAT reports strong demand for its Velo nicotine pouches

BAT Kenya has reported strong growth in the consumption of its nicotine pouches branded Velo. PHOTOS | COURTESY

BAT Kenya has reported strong growth in the consumption of its nicotine pouches branded Velo, indicating the company’s opportunity to grow in the new product category and reduce its reliance on mainstay cigarettes.

The performance of nicotine pouches in the Kenyan market was disclosed by the company's London-based parent firm BAT Plc.

“In Kenya, our accelerated national rollout in January 2023 has driven a near fourfold increase in adult consumer numbers,” the multinational said in an update. “Our learning from these two markets – Kenya and Pakistan – give us confidence in our ability to unlock the emerging market opportunity for modern oral.”

In Kenya, independent retailers are selling a Velo pack containing 20 pouches for up to Sh1,750. While Velo has been received well, BAT Kenya says it is unable to take advantage of the opportunity because of regulatory hurdles.

"Regulatory uncertainty relating to our modern oral category resulted in supply disruption of our tobacco-free oral nicotine pouches," the company said in commentary accompanying its results for the year ended December 2023.

"Additionally, it impeded the ability to commercialise our oral nicotine pouch factory in Nairobi, which would otherwise unlock manufacture for domestic and export markets and enhance our contribution to the country’s economic growth."

BAT introduced the pouches, then branded Lyft, in 2019 but stopped marketing them in 2020 when the government said it should be regulated as a tobacco product even as BAT built a factory to produce it.

"We continue to engage transparently on a sustainable regulatory framework, upon which the commercialisation of our oral nicotine pouch factory will further unlock shareholder value and support the government’s manufacturing and exports agenda," BAT Kenya said.

The company reintroduced the commodity –rebranded to Velo— in July 2022 on a trial basis.

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Note: The results are not exact but very close to the actual.