Players in the tobacco industry are staring at a fresh headache as the government proposes to ban nicotine pouches, in what is likely to upset several firms, including BAT Kenya, which planned to pivot from conventional cigarettes.
A State-sponsored Bill has sought to prohibit dealing in nicotine pouches, or pouches that contain nicotine, flavourings, sweeteners and plant-based fibres derived from tobacco plants or synthetic nicotine.
The Alcoholic Drinks and Drugs Control Laws (Amendment) Bill, 2026, also seeks to ban shisha, a flavoured tobacco product smoked through a water pipe.
‘A person shall not manufacture, sell, offer for sale, use, advertise, promote or distribute shisha or nicotine pouches,’ reads the Bill, which was sponsored by Majority Leader in the National Assembly Kimani Ichung’wah.
Those who contravene this clause shall be liable to a fine of not more than Sh5 million or serve a jail term of at least 10 years or both upon conviction.
Other players in the nicotine pouch market include Philip Morris International, which deals in the Zyn brand, through its US subsidiary, Swedish Match North America LLC.
The Kenya nicotine pouch market also hosts other brands including Goat, which is manufactured by Consumer Brands International, Paz by Dholakia Tobacco Pvt. Ltd, Sky by NiqoCo Limited, Red Piper by N.G.P Tobacco ApS, and Gold Pouch.
The proposed ban comes just after BAT Kenya resumed the sale of the smokeless tobacco product, Velo, riding on regulatory changes that paved the way for their launch in the first half of 2025.
BAT’s core business of selling cigarettes has come under pressure as the health effects of smoking have become increasingly apparent, with governments around the world imposing higher taxes and other restrictive laws to discourage tobacco use.
The company’s response has been to introduce alternative products that it says are less harmful, such as modern oral nicotine pouches.
After months of a stand-off with the government on regulation of nicotine pouches, BAT Kenya launched the smokeless product in June 2025.
Half-year sales of nicotine pouches helped offset the downturn in domestic sales in the first half of 2026 caused by the proliferation of illicit trade.
BAT Kenya management was upbeat that, with the accommodative regulatory environment, nicotine pouches would account for a fifth of its annual sales in the medium term as it pivots from traditional combustible cigarettes.
Those hopes might be dashed should the proposed law, which has been introduced in the National Assembly and is awaiting committee scrutiny, be passed in its entirety.
BAT Kenya chief executive Sidney Wafula said the company was still trying to understand the rationale behind the proposal, given that the government is already working on a Tobacco Control Bill.
‘Then there is another thing. So, how does this thing work?’ he asked, calling for regulatory certainty and stability.
Tobacco companies’ attempts to introduce nicotine pouches in different markets have not been easy, with consensus on the degree to which they are less harmful compared to traditional combustible cigarettes not being reached.
In 2024, the company was forced to sell its nicotine pouch manufacturing machinery at its Nairobi factory after it had remained idle for five years because of the marketing ban, saying it would rely on imports once it received approval to reintroduce the pouches to the market.
BAT had introduced the pouches in 2019-then branded Lyft-as it sought to diversify away from combustible cigarettes. It, however, stopped selling them a year later after the government ruled that they should be regulated as a tobacco product.
Net revenue grew 4.6 percent to Sh12.2 billion in the six months to June 2026, largely due to a recovery in export sales, which benefited from a stable currency and offset adverse macroeconomic conditions.
The NSE-listed firm maintained an interim dividend of Sh10 per share as net profit for the six months to June 2026 rose 3.1 percent to Sh3.08 billion, supported by higher export sales and increased demand for oral nicotine pouches.
Finance income rose to Sh136 million from Sh97 million in the first half of 2025, while income tax expense eased slightly to Sh1.32 billion from Sh1.34 billion. BAT also collected Sh6.69 billion in excise duty and VAT on behalf of the government, down from Sh6.76 billion a year earlier.