BAT blows whistle on surging illicit cigarettes trade
Counterfeit Clouds: The government is losing roughly KES9 billion annually in lost revenue from tax-evaded cigarettes in Kenya as nearly four out of 10 cigarettes consumed in the country are illicits.
The government is losing roughly KES9 billion annually in lost revenue from tax-evaded cigarettes in Kenya as nearly four out of 10 cigarettes consumed in the country are illicits.
In a statement announcing British American Tobacco's results for the six months ended June 30, 2025, the company said illicit cigarettes now account for 37 percent of tobacco products in the market, which is a steady increase from the 26 percent reported in 2022.
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"In the domestic market, constrained consumer purchasing power drove down-trading to lower prices brands, reduced consumption and contributed to surge in illicit trade. Enhanced enforcement action and collaboration of all stakeholders is required to effectively curb the menace, bearing in mind the quantum of the challenge," BAT noted in its market update.
“This alarming rise in illegal cigarette trade is not only depriving the Kenyan government of vital revenue needed for the country’s economic stability, but is also undermining the security and livelihoods of thousands of Kenyans in our value chain,” BAT Kenya managing director Crispin Achola said in an earlier report in June.
He added: “The illicit trade in cigarettes is not only an economic issue, it is a matter of national security and public interest.”
Net profit
During the half, BAT reported a 40 per cent increase in net earnings to KES3 billion attributable to cost management and improved efficiency in generating profits.
However, revenue remained flat at KES11.7 billion, a decrease from the KES14.1 billion which the company reported three years ago.
"Our export markets faced considerable headwinds, including adverse weather conditions, geopolitical tensions and currently devaluation. Despite these challenges, export sales volume was marginally higher, reflecting the benefit of favourable geographical mix. However, reported export revenues were adversely impacted by a lower transactional exchange rate between the Kenya Shilling and USD," BAT explained.
The company will be paying an interim dividend of KES10 per share, reflecting a departure from the KES3.5 to KES5 range which has been in place since 2018.
