Largest East Africa Brewery to Hike Beer Costs after New Tax

Beer Lovers

The cost of doing business in an economy full of taxes being implemented every step of the way, and dwindling returns on investments, is crawling into the consumer pocket for the little money left at their disposal.

Manufacturers have cushioned themselves against bankruptcy by switching the tax burden to the consumer by increasing prices on their best-performing products. That has been the case with East Africa Breweries Limited (EABL) who noted that they could increase prices of its products if the Treasury implements a proposal to raise the corporate tax from 30 percent to 35 percent for firms with an annual income of more than Sh500 million.

Kenya Breweries Limited Managing Director Jane Karuku said EABL could increase the prices of products by Sh 20 in order to counter the new tax measures, that could hurt its revenues.

“Increasing the tax base means we also have to pass some of it to the consumer. That is going to make Tusker bottle move from the retail price of Sh160 to about 180 because the 35 percent works on the whole total drinks,” Karuku said

Ms. Karuku mentioned that with inflation rising, a tax rise would make brands expensive, increase the cost of doing business and make Kenya lose their competitive edge.

Last year, the National Treasury introduced changes to the law where excise duty will now be reviewed annually, with the rate pegged to the average rate of inflation of the past year.

For beer lovers, an extra twenty shillings could be affordable for now, if one opts to cut down on the number of bottles they consume in a day. But for heavy guzzlers who can knock a whole crate by themselves, a little budgeting or cheaper alternatives could really save the day.