E-Malt.com News article: Kenya: Reduction of taxes on sorghum, millet and cassava beer will give unfair advantage to EABL – Keroche Breweries

Keroche Breweries has welcomed Kenya government's reduction of taxes on beer made from sorghum, millet and cassava but added that it will give unfair advantage to EABL's products, AllAfrica reported on May 18.

In a statement issued on May 15, the company said the signing of the Alcoholic Drinks Control (Amendment) Act 2015 which removes excise duty levied at 90 per cent for beer made from sorghum, millet and cassava was a good move towards reducing cost of beer targeting the low-end market but added that its vodka products for this segment were left out.

"Keroche Breweries congratulates President Uhuru Kenyatta on signing of the Alcoholic Drinks Control (Amendment) Act 2015 as it reduces reduction of tax on beer made from sorghum, millet and cassava," said Keroche.

"The Act, as it stands now, presents a difficult challenge for Keroche Breweries as it removes a level playing field for alcoholic products targeting the lower market but are not made from sorghum, millet and cassava."

Keroche which manufactures Viena Ice, a ready-to-drink vodka that targets the lower market, said it is yet to get a response to a proposal it made last year to Parliament's finance committee and wondered whether the Act was approved by the house team given the speed at which it was signed.

"Keroche Breweries, whose fundamental drive has been the strong belief in the provision of alternatives to the lower market, believes that with the signing of this Act, it removes a level playing ground for whiskies, brandies, vodkas and ready-to-drink alcohol that cater for this market but now have to compete unfairly with those made from sorghum, millet and cassava that have been zero-rated," the firm said in the statement.

Competitor East African Breweries Limited lauded the reduction of tax for the low cost beer adding that it was a major boost for sorghum farmers.

"This is really welcome news and a big win for the sorghum farmers in the country, however we are still seeking clarity from treasury on this amendment and will closely monitor to gauge the full effect of the new pronouncement," said Kenya Breweries Limited's corporate relations director Eric Kiniti.

EABL will be the biggest beneficiary of this review as it will boost sales of its Senator keg low cost beer whose sales had greatly dropped and thousands of jobs lost in the last two years over higher taxes.

The Act grants remission only if the licensed brewer manufactures beer that has at least 75 per cent content of sorghum, millet and cassava.


20 May, 2015