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BAT raises cigarette prices on higher taxes

Beverley Spencer–Obatoyinbo
British American Tobacco (BAT) Kenya Managing Director Beverley Spencer–Obatoyinbo. FILE PHOTO | NMG 

BAT Kenya #ticker:BAT has raised the prices of nearly all of its cigarettes by up to Sh15 per packet in changes the company said are meant to pass increased taxes to consumers.

The price increments took effect on January 2. The Finance Act 2019 raised excise duty charged on cigarettes by 14.1 percent effective last November.

The levy per mille (thousand sticks) on filtered cigarettes rose to Sh3,157 from the previous Sh2,765. The tax on cigarettes without filters jumped to Sh2,272 from Sh1,990 per mille.

The Nairobi Securities Exchange-listed firm said the higher taxes have made cigarettes made in Kenya expensive, adding that this has, in turn, fuelled smuggling of cheap products from neighbouring countries.

“These new prices have been largely driven by the enactment of the Finance Act 2019, which has further increased the excise differential for tobacco products between Kenya and Uganda,” BAT said in response to queries from the Business Daily.

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“We are now seeing significant volumes of illicit cigarette products coming across the Ugandan border.”

Sportsman King Size, previously retailing at Sh175 per packet, is now selling at Sh190 while the price of Rothmans Blue has risen from Sh175 to Sh190 a packet.

Prices of the Embassy brands have risen by Sh10 to Sh260 per pack. Rooster, the low-end brand, has seen its price jump by Sh5 to Sh130 per packet. BAT says the prices are only guides and that consumers may see even higher final prices at the shops.

“It is worth noting that what we provide as a manufacturer are recommended retail prices which only act as a guide and therefore some variations in prices might be witnessed whenever such prices adjustments occur,” the company said. The change in price for BAT products comes barely a few months after the listed tobacco manufacturer reported a 25.5 percent rise in net earnings in its 2019 half-year to Sh2.53 billion, buoyed by a 10 percent increase in gross revenue to Sh19.2 billion.

The company attributed the revenue increase to excise-led pricing impact in Kenya and Somalia coupled with growth in cut-rag sales to Sudan.

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