Business
New Alcohol Laws Reduce Brewers’ Revenue
Kenya’s brewing industry says it has already suffered a sharp drop in revenue following the implementation of new laws governing the production, sale and consumption of alcohol.
Passed in September, ahead of the drinks industry’s busiest period of the year around Christmas, the Alcoholic Drinks control Bill legislation reduces the number of hours bars can operate and legalizes traditional, often cheap liquors that were previously banned.
Drinks firms sa they have registered a sharp drop in sales since the bill’s implementation, despite a strong rebound in the economy which expanded by 6.1 per cent year-on-year in the third quarter of 2010.
“We have compared our sales for 2009 and 2010 and we have seen a 50 per cent drop – the bill was rushed – they (government) needed to consult us”, Tabitha Karanja, Managing Director of Keroche Breweries told Reuters.
Rwathia Distributors, a dealer for market leader East African Breweries, said sales were down more than a third after selling only 92,000 beer cases in December 2010, down from 150,000 in 2009.
The beginning of 2011 does not offer much cheer for the industry either.
“We projected selling 160,000 cases in December but we are now thinking of retrenching to break even – January and February are the direst months”, said Stephen Njuguma, in accountant at Rwathia.
“The timing of the implementation of the law during the peak season was not optimal”, said Brenda Mbathi, corporate relations director at EABL, a subsidiary of Diageo which produces leading local brands including Tusker and Pilsner.
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Sugar Tax ‘ll Threaten Manufacturing Sector, Says CPPE
In a statement, the Chief Executive Officer, CPPE, Muda Yusuf, said while public health concerns such as diabetes and cardiovascular diseases deserve attention, imposing an additional sugar-specific tax was economically risky and poorly suited to Nigeria’s current realities of high inflation, weak consumer purchasing power and rising production costs.
According to him, manufacturers in the non-alcoholic beverage segment are already facing heavy fiscal and cost pressures.
“The proposition of a sugar-specific tax is misplaced, economically risky, and weakly supported by empirical evidence, especially when viewed against Nigeria’s prevailing structural and macroeconomic realities.
The CPPE boss noted that retail prices of many non-alcoholic beverages have risen by about 50 per cent over the past two years, even without the introduction of new taxes, further squeezing consumers.
Yusuf further expressed reservation on the effectiveness of sugar taxes in addressing the root causes of non-communicable diseases in Nigeria.
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