Manufacturers of alcohol spirits from locally grown agricultural products such as sorghum, millet, or cassava will be compelled to sell them for a maximum of Sh350 a litre to qualify for excise tax waivers, Treasury Cabinet Secretary John Mbadi said in new proposed rules.
The new draft Excise Duty (Remission of Excise Duty) Regulations, 2025 seek to extend the 80 percent waiver to spirits and wine manufactured from locally grown crops such as sorghum, millet, and cassava.
Currently, only beer made from locally grown produce enjoys this relief, a benefit that has gone largely to Senator Keg, a low-end beer brand made from sorghum by East African Breweries Limited (EABL).
However, in the latest regulations pending public participation, the waiver will be extended to spirits and wine made from locally grown crops, excluding sugarcane and barley.
Nearly all locally produced alcohol, or ethanol, is made from sugarcane, while most beer is made from barley.
Earlier regulations published on May 30 had put the price range of spirits at between Sh1,000 and Sh1,200 per litre if they were to enjoy an excise duty relief of up to 80 percent, a figure that has since been significantly reduced.
The fresh regulations have also removed the price floor for all alcoholic categories to enjoy duty remission while reducing the maximum price of a litre of spirits by 70.8 percent.
By extending the remission to other alcoholic beverages, the government hopes to boost local production, reduce reliance on imported raw materials, and address the menace of fake alcohol consumption among low-income populations. "The objective of these regulations is to provide a framework for the remission of excise duty on beer, spirits, or wine manufactured from agricultural products grown in Kenya," said Mbadi in the notice.
Mr Mbadi added that local farmers, especially those who grow cassava, millet, and sorghum, will be assured of a "reliable and sustainable market for their produce."
The decision by the government to set a floor in the earlier draft regulations was not received warmly by EABL, which has been pushing for changes that would see it raise the retail price of Senator Keg.
Senator keg is made from 75 per cent local materials, the biggest component being sorghum grown in the semi-arid parts of Kenya. FILE PHOTO | NATION MEDIA GROUP
The wine has to consist of at least 75 percent sorghum, millet, cassava, or any other agricultural products grown in Kenya, be packed in a wooden barrel of at least 30 litres, and be sold at a retail price of not more than Sh700 per litre.
All producers also have to be tax-compliant and produce a list of contracted farmers supplying the agricultural products.
If the draft regulations are adopted, EABL will be at liberty to increase the price of Senator Keg for the first time in eight years.
Since the introduction of excise duty based on alcohol content, the standard rate is Sh22.50 per centilitre of pure alcohol for beer.
With beer made from locally produced agricultural products enjoying a relief of up to 80 percent, it means Senator Keg is exempted from paying excise duty of Sh18 per centilitre, or Sh1,800 per litre.
Senator Keg was introduced to the Kenyan market in 2004 when the government sought to use the low-cost beer to dissuade low-income consumers from drinking illicit alcohol, which had killed several people and left dozens blind.
From 2006, Senator Keg was exempt from excise duty, which saw the demand for it among the low-income consumers in urban areas soaring.
