When shareholders of British American Tobacco Kenya gathered in June to approve a record dividend payout of KSh70 per share, the mood was celebratory.
The cigarette maker had pulled off what appeared to be an impressive financial turnaround.
Revenue had fallen sharply. Illicit cigarettes had captured nearly half of Kenya’s tobacco market. Yet profits surged.
Profit before tax climbed to KSh7.7 billion from KSh6.5 billion while net profit rose to approximately KSh5.2 billion. BAT Kenya’s board rewarded investors with the largest dividend in the company’s history. According to the company’s 2025 annual report, management pointed to cost controls, export performance and the successful relaunch of its tobacco-free nicotine pouch brand Velo during the second half of 2025.
The official story is one of innovation and adaptation.
The story behind the numbers raises far more uncomfortable questions.
At the centre of BAT Kenya’s future growth strategy sits a small white pouch that many parents, teachers and health advocates say has quietly infiltrated schools, campuses and youth spaces across the country.
The product contains no tobacco leaf.
It produces no smoke.
It leaves no smell on clothes.
It can be used discreetly in classrooms, offices, churches and bedrooms.
What it does contain is nicotine, one of the most addictive substances legally sold in Kenya.
And increasingly, it appears to be the product BAT is counting on to replace declining cigarette consumption.
BAT’s Own Numbers Reveal The Strategic Shift
A close reading of BAT Kenya’s latest annual report reveals a company preparing for a future beyond traditional cigarettes.
The report explicitly highlights the successful relaunch of Velo nicotine pouches in the second half of 2025 as part of its strategy to advance what it calls “A Smokeless World.”
Globally, BAT’s dependence on nicotine pouches is even clearer.
The multinational tobacco giant reported that revenue from its Velo oral nicotine category increased by nearly 50 percent during 2025, reaching more than £1.1 billion worldwide. Modern oral nicotine products were the fastest-growing segment in BAT’s portfolio.
In other words, while cigarettes remain enormously profitable, nicotine pouches are increasingly where investors see future growth.
That reality makes Kenya especially significant.
Internal company presentations and industry reporting have repeatedly identified Kenya as a strategic launchpad for BAT’s nicotine pouch ambitions across eastern and southern Africa.
The battle over Velo therefore was never simply about one product.
It was about securing a foothold in what could become one of the most lucrative nicotine markets on the continent.
The Regulatory Fight That Revealed BAT’s Leverage
The fiercest controversy surrounding Velo has not involved the product itself.
It has involved the rules governing how the product is sold.
Investigations published by The Guardian, The Examination and Africa Uncensored revealed correspondence showing BAT Kenya pushing aggressively against proposed health warning requirements for nicotine pouches. The reports showed company executives warning government officials that planned investments could be affected if stricter warning labels were imposed.
Documents cited by those investigations showed BAT sought smaller warning labels than those originally contemplated under Kenya’s tobacco-control framework.
Eventually the Ministry of Health approved warning requirements significantly less prominent than what public health advocates had sought.
BAT has consistently maintained that it engages regulators transparently and supports evidence-based regulation.
Public health advocates see something different.
To them, the episode demonstrated the extraordinary influence that multinational tobacco companies can still wield in developing economies where governments are balancing public health concerns against investment, jobs and tax revenue.
The question remains uncomfortable.
If nicotine pouches are genuinely a public-health breakthrough, why was there such an intense fight over how strongly consumers should be warned about their contents?
The Youth Question BAT Cannot Escape
Officially, Velo is intended for adults.
BAT states that its nicotine products are designed for adult consumers and that underage sales are prohibited.
Yet concerns about youth uptake have become impossible to ignore.
Researchers, educators and anti-tobacco campaigners have increasingly warned that nicotine pouches are gaining traction among younger users because they solve many of the barriers that once discouraged teenage smoking.
There is no smoke.
There is no lighter.
There is no smell.
There is no need to leave a classroom or dormitory.
The packaging resembles lifestyle products more than traditional tobacco.
The flavours often sound closer to chewing gum than cigarettes.
For a generation raised on social media aesthetics, the product appears radically different from the cigarettes their parents grew up fearing.
That distinction may be one of BAT’s greatest commercial advantages.
The company markets Velo as a modern nicotine alternative.
Critics argue that the same modern image risks making nicotine dependence appear fashionable, clean and technologically advanced.
The Science Behind The Concern
Nicotine itself remains the central issue.
Public debate often focuses on whether nicotine pouches are safer than cigarettes.
Many toxicologists agree that eliminating combustion removes some of the most dangerous aspects of smoking.
That does not mean nicotine becomes harmless.
Health authorities globally continue to warn that nicotine affects brain development in adolescents and young adults.
Research has linked youth nicotine exposure to impacts on attention, learning, memory formation and impulse control.
Because the human brain continues developing into the mid-twenties, young users face particular risks from sustained nicotine exposure.
The World Health Organization and multiple public health bodies have also warned that novel nicotine products can create new pathways into long-term dependence among people who might otherwise never have smoked.
This is where the economics become uncomfortable.
The most valuable customer for any nicotine company is not someone who purchases a product once.
It is someone who purchases it repeatedly for years.
Addiction is not an unfortunate side effect of the nicotine business.
It is the mechanism that sustains it.
The Profit Machine Behind The “Smokeless Future”
BAT’s financial disclosures show a company facing serious pressure in its traditional cigarette business.
Revenue declined nearly 10 percent during 2025. Illicit tobacco reached approximately 45 percent of the domestic market.
Yet investors were rewarded with record returns.
The explanation lies partly in the economics of newer nicotine products.
Industry analysts have long noted that oral nicotine products can carry attractive margins while requiring less complex manufacturing and distribution than traditional cigarettes.
Globally, BAT is investing heavily in nicotine pouches because executives view them as a major growth engine. Reuters reported this year that Velo’s strong performance has become increasingly important to BAT’s future strategy.
The implication is clear.
As cigarette consumption faces growing regulatory pressure, nicotine pouches may represent not the end of the nicotine business but its next chapter.
The Public Health Experiment Unfolding In Real Time
Kenya today finds itself at the centre of a large-scale public health experiment.
Supporters argue nicotine pouches could help adult smokers move away from combustible cigarettes.
Critics fear the country is simultaneously creating a new generation of nicotine-dependent consumers.
Both claims may ultimately prove true.
That is what makes the debate so consequential.
BAT Kenya’s shareholders have already seen the benefits.
The company’s profits have recovered.
Dividends have reached record levels.
Its global parent is increasingly betting on products like Velo to drive future growth.
The unresolved question is who ultimately bears the cost.
Years from now, Kenya may look back on Velo as a successful harm-reduction tool that helped smokers quit combustible tobacco.
Or it may look back on it as the product that normalized nicotine use for a generation that never intended to smoke in the first place.
For now, one fact is beyond dispute.
Behind BAT Kenya’s record dividend lies a rapidly expanding nicotine category that has become too important for the company to fail.
That reality alone explains why the fight over Velo has become one of the most consequential corporate battles in Kenya’s public health landscape.
