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Bar Owners, Distributors Warned Against Hiking Alcohol Prices

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The Alcohol Beverages Association of Kenya (ABAK) on Thursday urged retailers to stick to the Recommended Retail Prices (RRP) of the products they are selling.

This is as the industry awaits the final decision on the lobby group’s appeal to President Uhuru Kenyatta to scrap off some sections of The Finance Bill 2019 that propose to significantly increase excise rates on alcoholic beverages.

The Finance Bill, 2019 which proposes to increase excise rates on alcoholic beverages and cigarettes by an estimated 21%, has already been passed by Parliament and is awaiting presidential assent to become law but some retailers have already increased alcohol prices in anticipation of the expected increase.

“Despite well-spelt out prices, that are often published in the media for all to see and adhere to, it is not uncommon to buy a bottle of your favourite product at Ksh140 in one part of town and find the same retailing at Sh500 in another location,” said chairperson Gordon Mutugi in a press dispatch. 

“This exaggerated pricing does not only make it difficult for our consumers to enjoy their favourite tipple, some find it difficult to access and result to cheap and often illicit brands or commute to look for fair prices elsewhere,” added Mr Mutugi. 

Mr Mutugi also noted that there were instances where retailers are hiking prices per pack even in instances where the manufacturers haven’t increased prices. 

He said this tactic may push consumers to illicit drinks. “The emphasis for retailers has to be on offering value to customers. For those retailers who trade in a competitive environment and do over-price, this is a false economy which will only benefit you in the short term. 

Read: Kenyans Consume the Least Alcohol in Sub Saharan Africa

The lobby group opines that significant in excise do not translate into anticipated increases in government revenues. 

“They incentivize higher levels of illicit trade and tax evasion. Duty paid volumes for a number of excisable goods have been on the decline resulting in lower excise collections,” said Mutugi in the statement.

See also: New High for Liquor and Cigarretes in New bUDGET

However, significant and unpredictable excise increases will not reverse this trend. For heavily taxed industries such as alcohol, where up to 60% of revenues goes to taxation

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