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British American Tobacco - BAT strengthens its US New Category portfolio: Announces acquisition of Dryft Modern Oral business

11/03/2020 | 04:48am

- 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

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."

Enquiries

British American Tobacco Press Office:

Lydia Meakin / Anna Vickerstaff

+44 (0) 20 7845 2888 (24 hours) | @BATPress

Investor Relations

Mike Nightingale: +44 (0)20 7845 1180

Victoria Buxton: +44 (0)20 7845 2012

William Houston: +44 (0)20 7845 1138

John Harney: +44 (0)20 7845 1263

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(C) 2020 M2 COMMUNICATIONS, source M2 PressWIRE

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