British American Tobacco acquires Dryft Modern Oral nicotine business

The acquisition has been made through Modoral Brands Inc., an indirect, wholly owned subsidiary of BAT’s US subsidiary, Reynolds American Inc.

LONDON: British American Tobacco (BAT) announced that the US business of the BAT Group (BAT) has acquired the nicotine pouch product assets of Dryft Sciences, LLC (Dryft), a US-based Modern Oral nicotine product company.

New Category Portfolio Expansion in the US:

·    This acquisition expands BAT’s Modern Oral portfolio in the US, expanding from 4 to 28 product variants. It follows the acceptance of Dryft’s recent Pre-Market Tobacco Product Application (PMTA) submission for filing by the US Food and Drug Administration.

·    The enhanced portfolio will include a wider range of nicotine strengths and flavours providing adult nicotine consumers with a greater degree of choice, covering all key consumer preferences. This will significantly strengthen BAT’s portfolio in a fast-growing nicotine category in the US.

·    BAT will rebrand Dryft’s US portfolio under its global Modern Oral brand, VELO, and expects to accelerate growth through superior distribution, marketing and channel capabilities.

This acquisition is a further demonstration of BAT’s continued commitment to its purpose, to build A Better Tomorrow by reducing the health impact of its global business, which entails:

·    Committing to providing adult consumers with a wide range of enjoyable and less risky products

·    Continuing to be clear that combustible cigarettes pose serious health risks, and the only way to avoid these risks is not to start or to quit

·    Encouraging those who otherwise continue to smoke, to switch completely to scientifically-substantiated, reduced-risk alternatives

·    Tracking and sharing progress of our transformation

BAT aims to accelerate the growth of its New Category revenues at a faster rate than its total revenue, reaching £5bn in 2025. 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.

Jack Bowles, CEO of BAT, said: “Today’s announcement underscores our societal commitment to accelerate our transformation and build A Better Tomorrow. Our multi-category strategy is key to our transformation.

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

Guy Meldrum, CEO of Reynolds American Inc., said: “The modern oral category in the US is 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.”

Jason Carignan, President of DRYFT Sciences, LLC, said: “We’re proud of the tremendous momentum we’ve built with Dryft and thrilled that our strong product portfolio will now serve to enhance the Velo brand. We remain confident that modern oral innovations like Dryft and Velo will continue to find an adult consumer base seeking alternatives to traditional products.”

The acquisition has been made through Modoral Brands Inc., an indirect, wholly owned subsidiary of BAT’s US subsidiary, Reynolds American Inc.

The expanded US VELO portfolio will now include three nicotine strengths (2mg, 4mg and 7mg) in 8 new flavours: Wintergreen; Spearmint; Cinnamon; Dragon Fruit; Citrus Burst; Black Cherry; Peppermint; and Coffee.

These variants complement the existing US VELO portfolio which is available in 2mg and 4mg nicotine strengths in two flavours: Citrus; and Mint. None of these products have received FDA clearance to make a claim of modified risk or modified exposure.

Modoral Brands Inc. (Modoral) is an operating company that is indirectly, wholly owned by Reynolds American Inc. (RAI), a member of the British American Tobacco Group. Today’s adult nicotine consumers have shifting preferences for product format and experience, and Modoral is listening to these preferences and delivering responsive products.

Modoral is committed to responsibly marketing its tobacco products, and its marketing communications are designed for, and directed to, existing adult nicotine consumers who are 21 and older.

BAT is a leading, multi-category consumer goods business, established in 1902. Our purpose is to build A Better Tomorrow by reducing the health impact of our business through offering a greater choice of enjoyable and less risky products for our consumers.

The company has announced a target of increasing the number of its non-combustible product consumers from 11 million to 50 million by 2030; and to achieve at least £5 billion in New Categories revenues in by 2025.

www.bat.com

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