Tobacco farmers contracted by BAT Kenya earned Sh1.12 billion in the year ended December 2024, marking a 17.4 percent increase from the year before when the company paid them Sh954 million.
The company buys most of its tobacco leaf from farmers in Meru and Western Kenya, with the raw product used to manufacture cigarettes for the local and export markets.
BAT relied exclusively on sales of cigarettes and cut rag tobacco last year, after regulatory hurdles stopped its nascent diversification into nicotine pouches which it says has substantially reduced health risks.
“Our tobacco farming operation in Kenya partners with directly contracted farmers to grow high quality tobacco leaf, which is purchased by the company at competitive prices,” the company says in its latest annual report that disclosed the payout to farmers.
“In 2024, we contracted 1,870 farmers, mainly in Migori, Homa Bay, Bungoma, Meru and Busia counties.”
The company added that it has worked with the contracted farmers for decades to feed its Nairobi factory which produces its cigarette brands.
Tobacco is among the country’s cash crops that earn Kenyan farmers billions of shillings each year. East African Breweries Plc (EABL) has also contracted thousands of sorghum farmers in Western Kenya who earn more than Sh2 billion per annum for their produce.
BAT is expected to keep manufacturing cigarettes even as it plans a long-term pivot to smokeless products such as nicotine pouches that it stopped selling due to regulatory uncertainty.
“Sustainable regulation that is based on science is key to unlocking the potential for smokeless products in Kenya, a message that we continue to deliver through participation in national dialogue and transparent engagement with policy makers,” BAT’s Chairperson Rita Kavashe wrote in the report.
The company had zero sales of nicotine pouches in the year to December 2024 compared to Sh307.2 million a year earlier, halting its growth and diversification strategy.
BAT last year sold the machinery previously used in manufacturing the nicotine pouches as it waits for clarity on the commercialisation of the products.
While Kenya has forestalled the sale of the products, they have been allowed in 44 countries according to BAT’s London-based parent firm.
“In 2024, modern oral [nicotine pouches] was the fastest growing new category, driven by consumer acquisition –up 54.2 percent, reaching 7.4 million adult consumers,” the multinational said in its report.
BAT Kenya recorded a 19.4 percent decline in net profit to Sh4.4 billion in the year ended December 2024 when it suffered from higher operating costs and lower income from exports due to a stronger shilling.
The company had posted a net profit of Sh5.5 billion a year earlier.
Net sales rose marginally to Sh25.7 billion in the review period helped by price increments but higher costs and reduced income from exports led to the profit drop.
