2,000 outlets of EABL’s low-cost Senator beer close down

An additional 2,000 outlets selling the low-cost Senator beer have been closed as the excise tax on the brand takes a toll on consumers and earnings of East African Breweries Limited (EABL).

EABL said the number of closed Senator outlets has risen to 5,000 from 3,000 in December.

This has been linked to the government’s move in October to cut excise tax remission on the beer brand to 50 per cent from the previous 100 per cent.

READ: New tax cuts Senator Keg outlets by a quarter

The move has seen the effective tax on the beer rise to about Sh35 per litre, or half the rate charged on other brands like Tusker.

Retailers have in turn raised the price of the beer to between Sh42 and Sh50 from the previous Sh30 per 330ml serving, leading to reduced demand which has been blamed on the increased closure of the outlets.

“The number of closed Senator outlets is about 5,000,” said Joe Muganda, the CEO of Kenya Breweries Limited, the local subsidiary of EABL.

Mr Muganda added that the brewer was in talks with the government to have the excise tax on Senator eliminated or reduced.

He was speaking at a Press conference held in Nairobi Thursday as part of EABL’s efforts to lobby against illegal drinks, the main competitor of Senator.

Poisonous liquor has killed at least 80 people in various parts of the country in the past few days and left scores blind or nursing illnesses induced by the drinks such as Countryman Beer.

EABL said that Senator should remain tax-exempt so that it can fulfil its objective of luring more low-income people away from the cheap but lethal drinks.

The beer brand was introduced in 2004 with the encouragement of the government as a means of countering increased consumption of the illegal liquor.

It remains to be seen whether the excise tax will be reviewed downwards or eliminated in the upcoming budget statement where the Treasury will lay out its taxation policies.

The Treasury plans to raise Sh6.2 billion annually from the 50 per cent excise tax remission as part of widening the tax bracket to help fund the growing budget.

EABL says the introduction of excise tax on Senator saw the brand’s volume sales drop 85 per cent in the half year ended December compared to a similar period the year before.

Senator had emerged as one of the most popular EABL products and its recent performance has weighed down the brewer’s overall results.

The firm reported a 4.5 per cent rise in net profit to Sh4.1 billion in the half year ended December, helped by reduced selling costs and marginal growth in turnover.