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 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 awaits presidential assent to become law.
However, some retailers have already increased alcohol prices in anticipation, thus overpricing customers.
“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 favourite 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 made it difficult to buy drinks, a factor he said was likely to push consumers to second generation drinks, resulting in a boost to illicit brands.
“The emphasis for retailers has to be on offering value to customers. For 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 said duty paid in volumes for a number of excisable goods has been on the decline, resulting in lower excise collections, warning that significant and unpredictable excise increases would not reverse the trend.
He said manufacturers of alcoholic beverages were heavily taxed, where up to 60 per cent of revenues were taxed. Such increases help to incentivise tax evasion, smuggling and counterfeiting.
“Significant increase in excise duty does not automatically translate to 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.
