BAT Kenya's Velo Nicotine Pouches Drive Growth Amidst Regulatory Challenges

BAT Kenya's Velo Nicotine Pouches Drive Growth Amidst Regulatory Challenges

British American Tobacco (BAT) Kenya has experienced significant growth in the consumption of its Velo nicotine pouches. This indicates the potential for the company to expand in this new product category and decrease its dependence on cigarettes.

The success of nicotine pouches in Kenya was revealed by BAT Plc, the company's London-based parent firm. The multinational stated that its national rollout in January 2023 led to a nearly fourfold increase in adult consumer numbers. BAT's experience in Kenya and Pakistan has bolstered its confidence in unlocking the potential of modern oral products in emerging markets.

However, BAT Kenya faces challenges due to regulatory hurdles. Regulatory uncertainties have disrupted the supply of tobacco-free oral nicotine pouches and hindered the commercialization of the company's oral nicotine pouch factory in Nairobi. This factory has the potential to support domestic and export markets and contribute to the country's economic growth.

BAT had initially introduced nicotine pouches under the brand name Lyft in 2019 but discontinued their sale in 2020 due to a government directive that they should be regulated as tobacco products. The company continues to advocate for a clear regulatory framework that will enable the commercialization of its oral nicotine pouch factory, unlocking shareholder value and supporting the government's manufacturing and export goals.

In July 2022, BAT Kenya reintroduced the product as Velo on a trial basis. The company's recent report indicates that it remains optimistic about the growth potential of nicotine pouches in Kenya and its ability to contribute to the country's economy.