Excise hike on alcohol irks ABAK

The Alcohol Beverages Association of Kenya (ABAK) has urged retailers to stick to recommended retail prices as the industry awaits the final decision on an appeal to President Uhuru Kenyatta to scrap off some sections of The Finance Bill, 2019.

The Bill which proposes to increase excise rates on alcoholic beverages and cigarettes by an estimated 21 per cent, has already been passed by Parliament and is awaiting Presidential assent to become law.

However, some retailers have already increased alcohol prices in anticipation, thus overpricing customers.

Conflicting prices

“Despite well-spelt out prices that are often published in the media for all to see and adhere to, it is not uncommon to buy a bottle of your favorite product at Sh140 in one part of town and find the same retailing at Sh500 in another location,” said ABAK chair, Gordon Mutugi.

Mutugi said the exaggerated pricing makes it difficult to buy drinks, a factor he said is likely to push consumers to illicit drinks, resulting toa boost to illicit brands.

“The emphasis for retailers has to be on offering value to customers. For those retailers who trade in a competitive environment and over-price, this is a false economy which will only benefit you in the short term,” he said.

Mutugi, duty paid volumes for a number of excisable goods has been on the decline, resulting in lower excise collections, warning that significant and unpredictable excise increases will not reverse this trend.

He said manufacturers of alcoholic beverages are heavily taxed, where up to 60 per cent of revenues are taxed. Such increases help to incentivise tax evasion, smuggling and counterfeiting.

“Significant increase in excise duty does not automatically translate into anticipated increases in government revenues,” he said.

Euromonitor International, an independent provider of strategic market research in the world, returned a positive performance for Kenya’s alcoholic drinks market in 2018.