BAT Kenya Warns of Rising Illicit Cigarette Trade as Black Market Share Hits 45%

BAT Kenya has raised concerns over the growing threat of illicit cigarette trade, warning that the expanding black market is undermining legitimate businesses and eroding government tax revenues despite the company posting strong financial results in 2025.

The cigarette manufacturer said illicit tobacco products accounted for 45 percent of the market in 2025, up from 37 percent the previous year, highlighting what it described as one of the biggest challenges facing the tobacco industry.

The concerns were raised during BAT Kenya’s 74th Annual General Meeting (AGM), where shareholders approved a final dividend of Sh60 per share, bringing the total dividend payout for the year ended December 31, 2025, to a record Sh70 per share.

Despite pressure from illicit trade, the company reported an 18 percent increase in profit before tax to Sh7.7 billion in 2025, up from Sh6.5 billion recorded in the previous year. BAT Kenya attributed the growth to disciplined cost management and lower financing costs.

BAT Kenya Managing Director Crispin Achola said the company delivered strong financial performance despite operating in a challenging environment characterized by a growing influx of illegal tobacco products.

“2025 was a remarkable year for BAT Kenya. Despite a challenging operating environment in which the illicit trade in tobacco continues to grow, the company delivered strong financial performance for the year ended December 31, 2025. These results were driven by effective cost management and lower financing costs,” said Achola.

He noted that illicit cigarette trade remains a significant challenge both locally and globally, calling for stronger collaboration between industry players and government agencies to address the problem.

“The year was, however, marked by a continued rise in illicit cigarette trade, which remains a significant global and domestic challenge. We continue to engage with relevant stakeholders and government agencies in support of efforts to strengthen enforcement action and drive a more stable and compliant operating environment,” he added.

BAT Kenya said that while authorities have intensified efforts to curb the manufacture, distribution and sale of illegal cigarettes, additional enforcement measures are needed to stem the growing market share of illicit products.

Industry stakeholders have consistently argued that illegal tobacco products create unfair competition because they evade taxes, regulatory requirements and compliance costs, enabling illicit traders to sell cigarettes at significantly lower prices than licensed manufacturers.

The company said addressing illicit trade remains a strategic priority, both to safeguard the sustainability of the formal tobacco sector and to protect government revenue collections.

Beyond its financial performance, BAT Kenya reported increased support for contracted farmers, purchasing tobacco leaf worth Sh1.4 billion in 2025, up from Sh1.1 billion in 2024. The company said its operations supported more than 80,000 livelihoods across its value chain.

The manufacturer further noted that all its contracted farmers are now growing alternative crops alongside tobacco as part of efforts to diversify household incomes, improve food security and enhance resilience among farming communities.