Finance Bill 2024: EABL warns prices of Guinness, Senator Dark, Chrome will be increased

The East Africa Breweries Limited (EABL) is warning of massive job losses in the alcoholic beverage value chain if the government pushes through with its intention to increase taxes on the industry in the coming financial year.

According to Eric Kiniti, EABL’s Corporate Relations Director, this could lead to over 1,000 jobs being lost in the sector even as he warned of far reaching effect that will be occasioned by an increase in price of genuine spirit products.

The Finance Bill 2024 continues to make headlines owing to its aggressive taxation measures, and although the bill has proposed some reprieve for beer lovers, spirits which are consumed more are set to pay dearly should the bill become law.

In the bill, the government aims to increase taxes on select beers, those with an alcohol by volume of above 6.33 percent, meaning consumers of Guinness and Senator Dark will have to pay more to enjoy their brews.

While in spirits which accounts for most of the consumption at 69 percent, the consumer will have to pay close to or more than double the current price.

“Our products here will be competitive, they will be more expensive...which means that it will be cheaper for an alcoholic player in the country to import as opposed to manufacturing locally, that has an impact on jobs; we are talking about over 1,000 jobs across the industry, and that will mean that you're incentivising importation as opposed to local value addition,” said Kiniti.

Further, the brewers are concerned that if implemented, the bill will see an increase in illicit brews owing to the increased cost.

For instance, a 250 millilitre bottle of Chrome vodka will see the price increase by 70 percent from the current Ksh.300 to Ksh.600.

This, the brewers say, will endanger more lives, adding that current data shows consumption of illicit in the country is at 59 percent mainly driven by spirits.

“The consumer who consumers this product is the low-income earner and they are the ones who are trying to look for something affordable that is safe, and now when you put it out of reach it means that they start consuming illicit,” noted Kiniti.

The policymakers have also been warned that an increased taxation on alcoholic beverages amid economic distress will further lower their revenue collection from the current Ksh.18 billion that come from spirits alone, cutting that by at least Ksh.3 billion to Ksh.15 billion and below.

“Government collects around Ksh.167 billion in excise, alcohol industry contributes about 30 percent of that which is about Ksh.51 billion. So we expect that the quantum will be lower than the Ksh.51 billion they collected in the last one year,” added Kiniti.

Kiniti now says the government should move away from irregular taxation and build a consistent and predictable tax policy that allows businesses adopt.