Consumption of spirits continued to fall following the end of the Covid-19 pandemic restrictions amid higher taxes on international premium drinks.
Data from the Kenya National Bureau of Statistics (KNBS) shows that imported spirits —including brandy, gin, whiskey and rum—dropped from an all-time high of 16.3 million litres at the height of Covid-19 pandemic in 2020 to 13.2 million litres in 2022, reflecting a major shift in drinking habits in the post-lockdown environment.
The drop in imported spirits, which includes mostly premium liquor –such as Scotch Whisky— in the post-lockdown period mainly due to a sharp increase in taxes with import duty raised from 25 to 35 percent according to Eric Githua, who is the chairperson for the Alcoholic Beverages Association of Kenya (Abak).
On July 1, 2022, the common external tariff (CET) on imported spirits charged by all the East African Community member states was increased from 25 to 35 percent.
Additionally, in the 13 months to November 2021, excise duty on spirits was increased three times, explaining the drop in imported spirits, which includes international premium spirits.
The decline in demand for spirits reverses an earlier trend where they had become popular among revelers. Mr Githua noted that even before the pandemic, there was a significant shift from other types of alcohol such as beer and wines to spirits.
“And the main reason was because of affordability,” Mr Githua said.
At the height of the pandemic there was prodigious consumption of Gilbeys, a juniper-derived gin made in the US, and which is locally sold by the EABL, the region's largest alcohol manufacturer owned by the UK multinational Diageo.
In its annual report for 2021, the EABL noted that it deliberately prioritised on popularising Gin and Tonic ritual.
“The approach worked and the results unequivocally speak to this. During the same period, we awakened the giant notably; Gilbey’s special dry gin is a leading light in the spirits category,” said EABL.
In the financial year ending June 2021, EABL’s sale of spirits jumped by 24 percent, the highest of all of the EABL’s drinks with beer sales growing by 14 percent after the economy was fully re-opened in September 2020.
However, this growth momentum for spirits would be slowed by the various tax measures implemented in the 13 months to November 2022.
Excise duty on spirits, for example, was increased three times in this period, seriously denting their demand as those in the upper middle class shifted to cheaper alternatives while those in the lower stratum of the consumer class resorted to illicit drinks.
Due to the increased import duty and excise taxes, what was initially affordable has become expensive for most revelers, with those who were drinking imported drinks moving to a local drink.
Mr Githua noted those who were consuming local drinks shifted to illicit drinks as prices influenced consumption down the consumer market.
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