Pub owners warn of job losses
Bar owners in Nairobi have warned of massive job losses following a serious decline in the consumption of low end beer brands.
The owners, through their umbrella body, Pub, Entertainment and Restaurants Association of Kenya (Perak) warned that several alcohol outlets could close as a result of the decline in the consumption of cheap brands such as Keg, Balozi, Allsops and Senator.
Perak CEO Lillian Kalela Muhanji says that most of the pub owners stopped stocking the cheap brands after the Government started taxing them.
“When the government during the last budget decided to introduce the taxes, the prices of these products shot up and they became unaffordable to the target consumers,” Ms Muhaji said.
Future in doubt
Already, 3,000 agents of the Senator Keg business have opted out, while an equal number is expected to follow suit, putting in doubt the future of the brand that was meant to help in curbing incidents of illicit brewers.
Hundreds of workers at the Keg plant will be affected even as their working time is reduced to five days a week from the current seven.
Ms Muhanji said it made no economic sense to continue selling the brand with the reduced profit margins.
“Most of the bar owners would rather concentrate on ordinary beer and other alcohol products that were not affected by the VAT Act. We have also seen most of the clientele revering back to premium alcohol because of the price changes,” she said.
The low-end beer variety that was previously exempt from the excise now attracts tax at the rate of 50 per cent.
The new tax measures added a cost of Sh35 per litre of the Keg.
Prior to the new VAT law, a 50-litre barrel of Senator beer was refilled at about Sh3,146 while retailers sold a 300ml mug for Sh30, with a half-litre mug going for Sh50.
A barrel of Senator Keg now goes for Sh6,544 — a 108 per cent increase. The price change has forced retailers to double their prices, with a mug now going for Sh65.
Latest East Africa Breweries Limited (EABL) financial results, showed that low cost brands such as Balozi, Allsops and Senator registered a double digit decline, with the Senator brand having the worst fall at 85 per cent.
“We saw over 100 per cent growth in the emerging spirits category partly as consumers switched from Senator,” EABL managing director, Charles Ireland said.