Kenyans ditch beer for spirits as prices rise
Beer production line at the EABL plant in Ruaraka, Nairobi. Alcohol lovers are changing their consumption habits as brewers raise prices due to increases in taxes, with more Kenyans now ditching beers for spirits.
Alcohol lovers are changing their consumption habits as brewers raise prices due to increases in taxes, with more Kenyans now ditching beers for spirits.
Financial results from the East African Breweries Limited (EABL) show that in the six months to December 2022, beer consumption fell by 13 per cent compared to a similar period in 2021, the company said yesterday, attributing the dwindling performance to excise taxes that have resulted in the price jumps.
The company says a series of excise tax increments accumulated to 23 per cent for beer and 34 per cent for spirits by November last year, affecting its Kenya business which fell by one per cent, even as Uganda and Tanzania grew by 19 per cent and 11 per cent, respectively.
“Consequently, beer volumes were down 13 per cent in Kenya, with performance further undermined by a reemergence of illicit alcohol during the period under review,” said EABL.
Overall, EABL said its beer business grew by two per cent in the six months, spirits (including Captain Morgan and Gilbeys) by four per cent, while premium brands (including Johnnie Walker and Tusker Malt) grew the highest by 13 per cent, with brands such as senator keg falling by two per cent. Beer remains the company’s main product, constituting 70 per cent of earnings.
The company reported a Sh8.7 billion profit in the half year to December, a 0.39 per cent drop from the Sh8.737 billion that it reported in a similar period in 2021.
Kenya operations
EABL managing director Jane Karuku said the company is determined to keep its key operations within Kenya despite the increasing taxes the alcohol industry has been lamenting about, even as she called on the government to slow down on excise tax increases that have affected its volumes and given room to growth in illicit liquor sales.
“If excise duty keeps going up, prices will also keep going up. Of all the countries in East Africa, Kenya reduced in volumes,” Ms Karuku said.
Kenya still controls 64 per cent of EABL business, with Uganda and Tanzania sharing the remaining less than 40 per cent on a near-equal basis.
“In terms of spirits and beer, we remain a beer business with 70 per cent beer and 30 per cent spirit. However, spirits will always grow faster than beer,” Ms Karuku said, adding that the beer business has been growing in Tanzania and Uganda.
Excise duty on beer increased by 17 per cent to Sh142 per litre of the product between 2021 and 2022, while on spirits it increased by 28 per cent to Sh356 per litre over the same period.
