Senator keg tax

Business Daily
Date: 08.05.2014
Page 8
Article size: 274 cm2
ColumnCM: 60.88
AVE: 115688.88
EABL lobbies
Treasury over
Senator keg tax
BY MUGAMBI MUTEGI
Beer maker East African Breweries
confidence is not high and
Limited (EABL) is in negotiations the reason I'm so concerned
with the Treasury over the excise tax about this is because people
slapped on Senator Keg
are moving back into illicit
concoctions."
last year causing a plunge
The taxation of Senator Keg im
in sales, Diageo president
mediately led to the near doubling of
for Africa Nick Blazquez
the drink's price to between Sh42 and
has said.
Sh50 from the previous price of Sh30
EABL says it hopes the
for a 330ml serving.
government will lower or
More than 70 people in five dif
scrap the 50 per cent levy
of the drink are pricesensitive, many
quit the drink causing sales to drop
drastically, pulling the group's overall
profit down with it.
"At its height Senator Keg sold
about 200,000 hectolitres a month
and in October 2013, sales fell to
less than 35,000 hectolitres," said
Mr Blazquez. "While sales have in
creased over the last quarter they are
still significantly below last year and
introduced on the low
ferent counties died this week after
this has driven the overall decline in
cost beer in the June
drinking illicit alcohol.
net sales for EABL."
What they
will do in the
forthcoming
budget will be
obviously their
decision
NICK BLAZQUEZ, DIAGEO
PRESIDENT FOR AFRICA
Budget speech set to be
read by Treasury Secre
tary Henry Rotich.
In the six months to December, EA
EABL has seized the opportunity
to lobby for a cut in the tax imposed BL's revenues grew by four per cent
on Senator Keg, and this morning to Sh31.8 billion from Sh30.6 billion
recorded during a similar period last
The excise tax dealt a blow for EA managing director Charles Ireland is
year, a dismal showing the brewer at
expected to address a press conference
BL's fast growing product as monthly
tributed to low Senator sales.
on the issue.
sales of Senator Keg plummeted from
EABL's profit also grew by a similar
Since Senator Keg's introduction
20 million litres to 3.5 million litres
margin to Sh4.1 billion compared to
in 2004, as one way of deterring the
following a sharp increase in price of
consumption of illicit and dangerous the previous year's Sh3.98 billion.
the drink.
'We are in conversations with the
Kenyan authorities and whilst they
recognise the issue, what they will do
in the forthcoming budget will be obvi
ously their decision," said Mr Blazquez
last week at a conference call with ana
lysts across the world.
He is also the Diageo
president for Turkey, Rus
sia, central and eastern
Europe. Diageo is EABL's
majority shareholder.
"Whilst I remain op
timistic that they will re
move this duty, my level of
brews, the drink was tax exempt.
However, in October the govern
ment lifted this tax protection seek
ing to raise Sh6.2 billion to fund the
national budget.
The Economic Survey 2014 shows
that last year the government earned
Shl6.9 billion from excise duty levied
on beer, a 2.4 per cent increase from the
previous year's SM6.5 billion.
Even as the brewer awaits the Treas
ury's June excise tax announcement (if
any will be forthcoming), it has now
resorted to launching new products
to cushion its earnings.
Jebel Gold a spirit priced at ShlO
for a 30ml tot which started being
tested in 300 retail outlets late last year
is now being distributed nationally in
about 1,500 outlets.
"We hope this affordable product
"Excise revenue from beer in
creased marginally despite the re will offer those who currently drink
versal of excise duty on containerised illicit alcohol a choice which does not
pose a health risk," said Mr Ireland.
beer," the recentlyreleased report
[email protected]
notes in part. Given that consumers
A keg bar at Kahawa West, Nairobi, file
Ipsos Kenya Acorn House,97 James Gichuru Road Lavington Nairobi Kenya

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