Alcohol sector set for shake-up

President Kibaki has assented to the Alcohol Control Bill, reversing the 30-year ban on brewing and consumption of traditional liquor in a move that promises to shake-up Kenya’s beverage industry.

The President’s nod will now see the government legalise the production, sale, and consumption of all traditional brews.

Proponents of the Bill argued that the ban imposed on traditional liquor during the early days of former President Daniel Moi’s rule had driven the business underground, with disastrous results

The Alcoholic Drinks Control Bill 2009 was sponsored by Naivasha MP John Mututho.

And its enactment into law promises to realign Kenya’s liquor market, which remains in the firm grip of East African Breweries Limited, the country’s biggest brewer and smaller players such as State-owned Kenya Wines Agencies Limited (Kwal) and Keroche Industries, which has a strong presence in the spirits market.

The new law also bans billboards promoting alcoholic drinks, media promotions and campaigns and limits the sale of alcoholic drinks to bars.

At present, alcoholic drinks are sold at a number of outlets such as supermarkets, petrol stations and kiosks.

Though mainstream brewers maintained that they are not worried of the competition from new players, some analysts predicted that the development has the potential to upset the revenue and profitability trends of established brewers in the long term.

Positioned themselves

“The structure of the beer industry is such that players have positioned themselves in certain segments of the market and locked them in,” said Francis Mwangi, an investment analyst at African Alliance.

“In the long-term, however, traditional liquor may win a significant share of the bottom end of the market, especially if inflationary pressure persists,” said Mr Mwangi in an earlier interview.

This means that mainstream brewers will have to examine their growth plans in a new market that is expected to see a proliferation of thousands of small brewers competing for consumers in the low-priced liquor market.

It comes at a time when EABL is reporting an upturn in its spirits business following a tax reprieve and a 14 per cent rise in the consumption of low priced Senator keg beer.

Illicit brews are estimated to control at least 70 per cent of Kenya’s spirits market, despite their blatant contravention of the set requirements for manufacturing as well as trade in alcoholic beverages.

Recently, the government has been pushed into disaster management as a significant proportion of low income earners turned to cheap illicit drinks — sometimes laced with deadly additives that have caused deaths or mass blindness among consumers.

Last April, about 18 people died in Nairobi’s Shauri Moyo Estate after consuming an illicit brew.