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EABL distributors raise beer prices by Sh10 a bottle
A section of the EABL plant in Ruaraka, Nairobi. Bar owners have since March 1 raised retail prices of select brands citing an increase in cost at the wholesale level. Photo/FILE
Beer distributors have increased the cost by up to Sh10 per bottle, hitting consumers hard even as East African Breweries Limited (EABL) denies raising factory prices.
Bar owners have since March 1 raised retail prices of select EABL brands, citing an increase in cost at the wholesale level.
A crate of Tusker is now selling at Sh2,523 up from Sh2,265, which translates to a Sh10 increase per beer at the retail level.
EABL, which ordinarily publishes in the dailies any price changes, said Tuesday it had not changed the ex-factory costs of its products, turning a spotlight on distributors.
“Kenya Breweries Limited (an EABL subsidiary) does not control the retail selling price of its products. It does not set the prices between the distributor and the retail outlets,” said EABL group corporate relations director Brenda Mbathi in an email statement.
The price increase comes at a time when EABL had reported a 14 per cent drop in half-year profit on account of high finance costs and could hurt the brewer’s efforts to grow its sales.
EABL controls more than 90 per cent of Kenya’s beer market. Its main competitor, Keroche Breweries, said it had not increased prices of its products.
Bar owners lobby group Pubs, Entertainment, and Restaurant Association of Kenya (Perak) said that its members in Nairobi and Mombasa were first to feel the increase.
“This happened last week but there was no notice, some of their sales representatives said it was because excise duty had gone up a while back,” said Perak national vice chairperson Alice Opee.
EABL, however, said that distributors had increased prices to cushion their profit margins.
“This has been necessitated by the rising cost of inflation and general increase in the cost of doing business,” added the statement.
Perak said the price increase will spread to other areas by end of the week. Amendments to the Finance Bill 2012 which were gazetted into law on January 9 by Finance minister Njeru Githae increased excise duty on beers.
Malted beer, stouts, porters, opaque beers, ciders and other fermented beverages will attract a duty of Sh70 per litre or 50 per cent of the retail price, whichever is higher. The previous tax rate was Sh70 per litre or 40 per cent of the retail price.
Wines and similar alcoholic beverages will attract a duty of Sh80 or a 50 per cent rate on the retail price, whichever is higher. The previous tax was Sh80 per litre or 40 per cent of the retail price.
“This time the increase will definitely be passed on to patrons,” said Sam Ikwaye, the former head of Perak and an industry insider. Mr Ikwaye said that operators also face increased operating costs due to an increase in licence requirements that have made it more costly to operate pubs.
The Alcoholic Drinks Control Act, popularly known as Mututho laws, increased the licensing fee to Sh100,000 per year from as low as Sh7,000.
Bar owners also have to get approvals from the National Environment Management Authority and licences from the Music Copyright Society of Kenya and various municipalities.
Analysts said that an increase in beer prices could push more consumers to informal drinks.
“It is likely that there’ll be a slowdown in demand probably in favour of spirits and in some cases illicit (drinks),” said Johnson Nderi, a research analyst at Suntra Investment Bank.
Alcoholic drinks join airtime as products that tax authorities have gone after in a bid to collect additional revenues to finance rising expenses.
