An attendant measures a mug of Senator Keg at a bar in Nairobi on October 19,2013. FILE
What you need to know:
Nearly 3, 000 outlets fail to pick orders of drink that targets low income earners.
Nearly a quarter of the 12,000 Senator Keg outlets across the country have stopped operations following a rise in the price of the low-cost drink in response to a new tax.
A source at East African Breweries Limited (EABL) says that nearly 3, 000 outlets have in recent weeks failed to pick new orders of Senator Keg.
The tax charge of 50 per cent, which started on October 1, has seen the price of the drink which is sold in 330ml containers increase from Sh30 to between Sh42 and Sh50, a hike that EABL reckons has cut sales by 80 per cent.
“While we are not expressly opposed to tax, the 50 per cent excise imposition has resulted in a price that has led consumers to choosing other risky alternatives,” said Mr Joe Muganda, the managing director of Kenya Breweries Limited, without giving figures.
Dip in sales
‘‘This risks destroying the entire value-chain and ultimately fails to realise the monetary benefits being sought. A lower rate would create a win-win situation for all stakeholders,” added Mr Muganda.
The brewer maintained that the dip in sales will make it difficult for the government to raise the targeted Sh6.2 billion from Senator Keg to fund an ambitious budget that includes free maternal care and provision of free laptops to Standard One pupils.
KBL launched Senator Keg with the support of the Government in November 2004. It is specifically targeted at the low-income consumer in need of hygienic and affordable beers.
In the year to June 2008, Senator had overtaken EABL’s jewel Tusker lager on the volumes front.
Tusker retained its position as the top contributor to the brewer’s revenue given the low pricing of Senator Keg.
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