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BAT looks to expand its footprint

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The group also wanted to encourage those who continue to smoke to switch completely to scientifically-substantiated, reduced-risk alternatives

British American Tobacco (BAT) said on Monday that it was expanding its footprint in the US by acquiring Dryft Sciences nicotine-pouch product assets. Photo: Richard Drew/AP

DURBAN – British American Tobacco (BAT) said on Monday that it was expanding its footprint in the US by acquiring Dryft Sciences nicotine-pouch product assets.

The group said the acquisition, which it did not reveal the deal value, would boost its US portfolio in Modern Oral nicotine, a fast-growing category in that country, and it would grow from four to 28 products variants after the acquisition.

Chief executive Jack Bowles said: “The addition of Dryft to our US Velo brand is a major step forward, further enhancing our successful vaping and oral portfolio.”

It is not the first time that BAT has made forays into the US market in terms of acquisitions.

In 2017 BAT boosted its next generation products by acquiring 57.8 percent of Reynolds that it did not already own for $54.5 billion (R885bn).

As a result BAT took total ownership of Reynolds and its stock was delisted from the New York Stock Exchange and S&P indices.

BAT said that it would rebrand Dryft’s US portfolio under its global Modern Oral brand, Velo, and expected to accelerate growth through superior distribution, marketing and channel capabilities.

BAT intends to accelerate the growth of its New Category revenues at a faster rate than its total revenue and reach £5bn (R105bn) in 2025.

In the six months to end June results, the New Category division reported a 14.7 percent increase in revenue to £628 million while group revenue increased by 0.8 percent to £12.27bn.

“BAT has an ambition to reach 50 million consumers of non-combustibles worldwide by 2030.

“Today, BAT’s non-combustible products are already available in more than 50 countries across the globe,” the group said.

BAT’s non-combustible product consumers stand at 11 million.

The group said that the acquisition further demonstrated its continued commitment to reduce the health impact of its global business, which included committing to providing adult consumers with a wide range of enjoyable and less risky products.

The group also wanted to encourage those who continue to smoke to switch completely to scientifically-substantiated, reduced-risk alternatives.

Reynolds American chief executive Guy Meldrum said that the modern oral category in the US was developing rapidly.

“We are excited to expand the portfolio of Velo products to meet the evolving preferences of adult consumers.

“We are confident that, leveraging our strong in-market execution capability, the new Velo portfolio will contribute to accelerated growth,” Meldrum said.