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BAT Strengthens its US New Category Portfolio
British American Tobacco p.l.c.
Incorporated in England and Wales
(Registration number: 03407696)
Short name: BATS
Share code: BTI
ISIN number: GB0002875804
("British American Tobacco p.l.c." or "the Company")
BAT Strengthens its US New Category Portfolio:
Announces acquisition of Dryft Modern Oral business
- This acquisition is a further step in BAT’s societal commitment to accelerate its transformation
journey to build A Better Tomorrow
- This expands BAT’s US portfolio in Modern Oral nicotine, a fast-growing category in the US
- The products will be sold under BAT’s global Modern Oral nicotine brand, VELO, creating further
brand synergies
- This acquisition has no impact on BAT’s commitment to previously stated deleverage targets
LONDON 3 November 2020 – British American Tobacco p.l.c today announces 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.
BAT’s ‘A Better Tomorrow’ Corporate Purpose:
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.”
ENDS
ENQUIRIES:
British American Tobacco Press Office: Lydia Meakin / Anna Vickerstaff
+44 (0) 20 7845 2888 (24 hours) | @BATPress
British American Tobacco Investor Relations: Mike Nightingale / Victoria Buxton / William Houston / John
Harney +44 (0) 20 7845 1180/2012/1138/1263
NOTES TO EDITORS
The acquisition
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 portfolio
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.
About Modoral Brands Inc., and Reynolds American Inc.
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.
About BAT
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.
Forward Looking Statements
This announcement contains certain forward-looking statements, including “forward-looking” statements made within the meaning of
Section 21E of the United States Securities Exchange Act of 1934. These statements are often, but not always, made through the use of
words or phrases such as “believe,” “anticipate,” “could,” “may,” “would,” “should,” “intend,” “plan,” “potential,” “predict,” “will,”
“expect,” “estimate,” “project,” “positioned,” “strategy,” “outlook”, “target” and similar expressions. These include statements
regarding our intentions, beliefs or current expectations concerning, amongst other things, our results of operations, financial
condition, liquidity, prospects, growth, strategies and the economic and business circumstances occurring from time to time in the
countries and markets in which the Group operates.
All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that
could cause actual future financial condition, performance and results to differ materially from the plans, goals, expectations and
results expressed in the forward-looking statements and other financial and/or statistical data within this announcement. Among the
key factors that could cause actual results to differ materially from those projected in the forward-looking statements are uncertainties
related to the following: the impact of competition from illicit trade; the impact of adverse domestic or international legislation and
regulation; changes in domestic or international tax laws and rates and the impact of an unfavourable ruling by a tax authority in a
disputed area; adverse litigation and dispute outcomes and the effect of such outcomes on the Group’s financial condition; changes or
differences in domestic or international economic or political conditions; the impact of the COVID-19 pandemic; adverse decisions by
domestic or international regulatory bodies; the impact of market size reduction and consumer down-trading; translational and
transactional foreign exchange rate exposure; the impact of serious injury, illness or death in the workplace; the ability to maintain
credit ratings and to fund the business under the current capital structure; the inability to develop, commercialise and rollout New
Categories; and changes in the market position, businesses, financial condition, results of operations or prospects of the Group.
It is believed that the expectations reflected in this announcement are reasonable but they may be affected by a wide range of
variables that could cause actual results to differ materially from those currently anticipated. Past performance is no guide to future
performance and persons needing advice should consult an independent financial adviser. The forward-looking statements reflect
knowledge and information available at the date of preparation of this announcement and the Group undertakes no obligation to
update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Readers are
cautioned not to place undue reliance on such forward-looking statements.
No statement in this communication is intended to be a profit forecast and no statement in this communication should be interpreted
to mean that earnings per share of BAT for the current or future financial years would necessarily match or exceed the historical
published earnings per share of BAT.
Additional information concerning these and other factors can be found in the Company’s filings with the U.S. Securities and Exchange
Commission (“SEC”), including the Annual Report on Form 20-F filed on 26 March 2020 and Current Reports on Form 6-K, which may be
obtained free of charge at the SEC’s website, http://www.sec.gov, and the Company’s Annual Reports, which may be obtained free of
charge from the British American Tobacco website www.bat.com.
3 November 2020
Sponsor: UBS South Africa (Pty) Ltd
Date: 03-11-2020 09:00:00
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