This archive report was first published on 25 July 2019.
On July 25, 2019, beer and spirits manufacturers in Kenya opened talks with bar owners to stick to recommended prices to boost sales and protect their businesses from the impact of higher taxes.
The manufacturers, through their lobby group, the Alcohol Beverages Association of Kenya (Abak), expressed concerns that higher alcohol prices could hurt sales.
Locally brewed beer prices were adjusted upward by Sh10 in July 2019 due to tax increases, with the recommended retail price of Tusker Lager set at Sh160.
However, some bars raised prices above the recommended rates, raising fears that higher prices could dim sales.
Abak chairman Gordon Mutugi warned that if retailers failed to offer value to consumers, they would lose sales and goodwill across other categories.
He also noted that despite well-spelt out prices, there were significant price disparities between different locations, with the same bottle of beer selling at Sh140 in one area and Sh500 in another.
Abak cited a study it commissioned last year, which showed that increasing the price of legitimate alcohol pushed drinkers to illicit brews.
According to the study, consumers responded to changes in prices by changing the taste of the commodity, leaving a large population in the lower end of earners to resort to illicit, banned alcoholic beverages.
The government had raised excise duty on alcohol by 5.17 percent from July 1, 2019, and wines and whisky consumers were awaiting a 15 percent rise in excise tax when the Finance Bill became law.
Close to half of Tusker's recommended retail price went to the taxman, but Abak argued that there was a flaw in the formula the Treasury applied to adjust excise duty.
