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DIVERSIFICATION:  British American Tobacco-Kenya (BAT) continues to face challenges achieving its product diversification targets despite completing the  construction of a Sh2.5 billion Lyft facility in Nairobi’s industrial area.

The hub centered on the production of free oral nicotine pouches for the African and global market.

However, production of the commodity has not started, with the multinational cigarette manufacturer navigating regulatory guidance from the authorities. 

“Construction of the oral nicotine factory is complete, however, the facility is not yet operational as we review guidance from the relevant authorities,” said Mavuti in response to the Business Hub’s inquiry.

During a webinar session last year, BAT’s Executive Finance Director for East African Markets Philemon Kipkemoi said the facility will increase trade volumes for the company’s 50,000 business partners, in addition to employing 80 specialised skill personnel. 

BAT started marketing and selling the oral nicotine pouches locally in 2019 through imports, ahead of local production, but ran into headwinds of the Ministry of Health and civil rights groups as the venture lacked a clear regulatory framework, ledding to temporary stoppage last year.

Last year, Health Cabinet Secretary Mutahi Kagwe directed that the sale and distribution of BAT’s Lyft be done under the Tobacco Control Act, meaning it would be subjected to marketing restrictions including promotions, advertising and usage in public spaces.

Tobacco Control

Kagwe’s move followed intensive lobbying by Parents and Kenya Tobacco Control Alliance, who had raised concerns that Lyft- marketed as an alternative to cigarettes for addicted smokers- is accessible to minors who can easily abuse it, as it is cheap, retailing at Sh20 a pouch, and sold over the counter.

However, BAT views the delayed local production as a temporary setback, with the company having purposed to earn Sh75 billion through exports to African markets, in addition to the sales generating Sh650 million worth of import receipts for the government.

It has also rolled back the company’s plans to spend Sh1 billion earmarked for setting up sales and distribution networks within the Common Market for East and Southern Africa member states.

Production of the nicotine pouches are expected to drive a diversification process that will impact the over 4,000 contracted local farmers.