Eric Kiniti is the Group Corporate Relations Director for East Africa Breweries Limited (EABL).
Speaking in a recent interview with Spice FM, he explained why beer is more expensive in Kenya than any other country in East Africa.
Kiniti attributed the high cost of beer in Kenya to high taxes which has see the drinks retail at nearly double the prices of similar products in countries such as Uganda and Tanzania.
He said the huge difference in prices has seen Kenyans living in border towns crossover to have beer in neighboring countries and walk back.
“The recommended retail selling price for a bottle of Tusker, for example, is Ksh 190. A similar product in Uganda and Tanzania is selling at an equivalent of Ksh 100
“You go to most of our border towns and find that people would rather cross over to the other side of the border and drink beer than walk back,” he said.
Kiniti further explained how the recommended retail price is split to cater for taxes, pay farmers among other operational costs.
He noted that out of the Ksh 190 RRP, Ksh 107 takes care of the excise tax, value added tax and corporate tax.
From the remaining amount, Ksh 25 is given to EABL distributors and retailers as trade margin.
The remaining Ksh 57 shillings is used to pay farmers who supply Kenya Breweries Limited with grains, caters for salaries and the distribution cost.
The aforementioned amount also takes care of the overhead costs, advertising expenses, dividends for shareholders and any finances owed to the banks.
“The biggest shareholder in our business is the government… They should be sitting us in sessions and asking us how they can help is grow our business,” Kiniti said.
EABL has 1,200 employees and thousands other indirect employees working as distributors and retailers.
In April 2022, EABL threatened to increase the prices of its alcoholic products including beers and spirits if the Treasury implements a proposal to raise excise taxes on the products.
EABL managing director Jane Karuku says a tax increase will be a shock to the business, given that the sector is still reeling from the economic aftershocks of the COVID-19 pandemic.
“I think the tax changes will be a disaster. Ten percent is too much. It will make beer and spirits very expensive
“It will affect the whole ecosystem from farmers, bar owners and distributors. It will not be good for anybody,” she said.
EABL continues to be a major contributor to the revenues of governments in the region.
Taxes in the form of Excise Duty and Corporate Income Taxes in the half-year ended 31 December 2021 amounted to Ksh 45 billion across the region.
