Spirits imports fall on higher taxes
A collection of alcoholic beverages.
Consumption of spirits continued to fall amid higher taxes on international premium drinks.
Data from the Kenya National Bureau of Statistics (KNBS) shows that imported spirits —including brandy, gin, whiskey and rum—dropped from an all-time high of 16.3 million litres at the height of the Covid-19 pandemic in 2020 to 13.2 million litres in 2022.
According to Eric Githua, the chairperson for the Alcoholic Beverages Association of Kenya, the drop in imported spirits in the post-lockdown period is mainly due to a sharp increase in taxes, with import duty raised from 25 to 35 per cent.
East African Breweries Limited Group Corporate Relations Director Eric Kiniti and Alcoholic Beverages Association of Kenya (ABAK) chairman Eric Githua (L) during a press conference on the proposed Excise Duty (Excisable Goods Management System) (Amendment) Regulations 2023 on February 14, 2023.
In July 1 2022, the common external tariff on imported spirits charged by all the East African Community member states was increased from 25 to 35 percent. Additionally, in the 13 months to November 2021, excise duty on spirits was increased three times.
This reverses an earlier trend where spirits had become popular among Kenyans, with Mr Githua noting that even before the pandemic, there was a significant shift from other types of alcohol such as beer and wines.
“And the main reason was because of affordability,” Mr Githua said.
In the financial year ending June 2021, East African Breweries Limited’s sale of spirits jumped by 24 per cent, the highest of all of the firm’s drinks, with beer sales growing by 14 per cent. However, this growth momentum for spirits would be slowed by the various tax measures implemented in the 13 months to November 2022.
Mr Githua said that due to the increased import duty and excise taxes, what was initially affordable became expensive for most revellers, with those who were drinking imported drinks moving to local ones. Those who were consuming local drinks shifted to illicit ones.
