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Kenya. EABL raises beer prices to cushion against costs

East African Breweries has increased prices of some of its popular beer brands by Sh5 and Sh10, barely a year after it revised them when the government raised taxes on alcoholic drinks.

The regional beer giant attributed the increase to “escalating costs of raw materials and utilities” but brewers’ revenues have also been hit by new regulations on alcohol advertising, sale and consumption that have cut sales.

The latest regulations, known as Mututho rules, have put curbs on selling points and drinking hours, reducing the amount of beer consumed and sobering up an industry that was high on sales.

According to prices it released on Thursday, EABL appeared to punish the middle to the high-end of its drinking market by selectively raising prices of its premium beers and some of its most popular brands.

EABL’s flagship Tusker brand, which has been retailing at Sh90 for the 300ml bottle will now cost Sh95, while Tusker Malt increases to Sh100.

Others in this category are White Cup Lager and White Cup Light, which increased from Sh100 to Sh105.

Guinness 500ml bottle was among those increased by Sh10, with its price rising from Sh100 to Sh110.

A 300lm bottle of Tusker will retail at Sh80, Guinness at Sh85, while the 500ml Tusker can will cost Sh115, as the 330ml one rises to Sh95.

“The market and business environment for the formal alcohol beverage sector has been challenging of late,” Ms Brenda Mbathi, corporate relations director at EABL, said on Thursday.

“This has increased the pressure on our cost of goods from our various suppliers leading to increased input costs.”

Other beer brands including Pilsner, Castle Senator cage, President and Redds remained untouched, signalling that the brewer could sparing the low-end of the market from the pain of the price increases and focus on the well-off to grow its revenues.

Coming just two months before the budget, the latest increase has got the government and beer lovers off-guard, putting them on stand-by for more price increases in case the government imposes more taxes on beer to raise money for the over Sh1 trillion budget.

The last time EABL increased its prices was in June last year after Finance minister, Uhuru Kenyatta, raised excise duty on malt and non-malt beer from Sh54 and Sh45 per litre to Sh65 per litre and Sh55 respectively in the current fiscal year’s budget.

The exchequer planned to raise Sh2.5 billion from this sin tax.

This came at a time the local beer market had been slightly hit by slow economic growth and high cost of production.

East African Breweries, which in 2009 paid Sh25 billion in taxes, unsuccessfully lobbied for a drop in taxation.

7 Apr. 2011

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