Beer makers now warn bar owners on price increases

Beer and spirits manufacturers have directed bar owners to stick to recommended alcohol prices saying the new taxes proposed in the Finance Bill are yet to become law.

The manufacturers through their lobby--Alcohol Beverages Association of Kenya (ABAK)—said some retailers had already increased spirits prices in anticipation of the new law.

MPs proposed to increase excise duty charged on wines and spirits by 19.77 percent and 20.25 percent respectively through amendments to the Finance Bill, which is yet to be signed by President Uhuru Kenyatta.

The lobby reckons that higher alcohol costs could hurt sales.

“Some unscrupulous retailers have already increased alcohol prices in anticipation, thus overpricing customers out of their favourite drinks,” said ABAK chairman Gordon Mutugi.

“For those retailers who trade in a competitive environment and do over-price, this is a false economy which will only benefit you in the short-term,” he added.

ABAK said a study it commissioned last year showed that increasing the price of legitimate alcohol tends to push drinkers to illicit brews, and denies the State taxes.

The government raised excise duty on alcohol by 5.17 percent from July 1 even as wines and whisky consumers await the rise in excise tax on the Finance Bill once it becomes law.

Last year excise duty was raised by 5.2 percent, underlining Kenya’s position of having one of the highest rates of tax on beer on the continent.

For instance close to half of Tusker’s recommended retail price goes to the taxman.