British American Tobacco (BAT) Kenya has revealed that it lost an estimated KSh2.5 billion in revenue in 2025 due to the rapid growth of the illicit cigarette trade.
This is even after the company posted improved profitability through cost controls and currency stability.
The company’s latest financial results show that illegal tobacco products now account for nearly half of the domestic market, posing a major threat to legitimate businesses and government revenue.
Illicit Trade Hits 45% as the company Loses Billions
According to a report by BAT Kenya, illicit trade accounted for Ksh 2.5 billion, a threat to the tobacco industry in Kenya.
The company states that illegal cigarettes now represent 45% of the domestic market, up from 37% in 2024.
BAT estimates that this trend deprives the government of around Ksh 12 billion annually in lost tax revenue, undermining public finances and national development programs.
“In Kenya, the domestic market continues to be adversely impacted by illicit trade. Illicit cigarette prevalence now represents 45% of the domestic market, a drastic increase from 37% in 2024 (according to third-party research). This illicit activity not only undermines industry revenues but also deprives the Government of an estimated Ksh 12 billion annually,” stated BAT Managing Director Crispin Achola.
BAT has also reaffirmed its commitment to combating illicit trade and promoting transparency in the country.
“The Company remains committed to working with relevant government agencies, combating the illicit trade menace and engaging transparently for progressive and evidence-based regulation of the industry,” the report read in part.
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BAT Records Growth Despite Huge Revenue Loss
Despite the 2.5 billion losses in illicit trade, the firm has recorded growth.
Growth in 2025 was driven mainly by disciplined cost management and lower finance expenses, even as sales volumes declined.
Net revenue fell by 10%, from Ksh 25.7 billion in 2024 to Ksh 23.2 billion in 2025, largely due to the rising prevalence of untaxed and unregulated cigarettes in the market.
According to the company, revenue was supported by stable export sales, which accounted for approximately half of the Company’s revenue, and the resumption of oral nicotine pouch sales in the second half of the year.
Total operating costs declined by 15 per cent to Ksh 15.7 billion, supported by productivity improvements and reduced production volumes. The company also benefited from currency stability, recording finance income of Ksh 0.2 billion compared to an exchange loss of Ksh 0.8 billion in the previous year.
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Achola stated that the company’s performance reflected resilience in a difficult environment.
“I am happy to report that despite a challenging environment driven by the growth of illicit cigarettes that now dominate the market locally and regionally, the company was able to post positive results.”
Measures To Curb Losses in The Company
The Board has also proposed measures to dismantle illicit supply networks, restore market integrity, and protect compliant businesses, including:
- Coordinated and sustained enforcement
- Stronger border controls
- Enhanced market surveillance
- Stricter penalties for offenders
- Improved inter-agency collaboration
In delivering sustainable shareholder value, the firm has proposed a final dividend of KSh 60 per share, to be approved by shareholders at the Annual General Meeting on 12th June 2026.
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