The East African Breweries Limited (EABL) will be free to raise the retail price of its low-end beer brand Senator Keg for the first time in eight years, should new regulations published by the Cabinet Secretary for National Treasury John Mbadi take effect.
The new draft regulations allow manufacturers of beer produced from locally grown agricultural products, such as cassava, millet and sorghum, to enjoy excise duty remission. This will enable them to increase the retail price to between Sh120 and Sh150.
Currently, beers of this kind, including EABL’s Senator Keg, which is made from sorghum, are sold for no more than Sh100 to qualify for 80 percent relief on excise duty payments. This price was last set eight years ago.
“Conditions necessary for remission of excise duty for beer…sell the beer at not more than one hundred and fifty shillings and not below one hundred and twenty per litre,” reads the Excise Duty (Remission of Excise Duty) (Amendment) Regulations, 2025 published by Treasury.
Since the introduction of excise duty based on the alcohol content, the standard rate is Sh22.50 per centilitre of pure alcohol for beer.
With the beer made from locally produced agricultural products enjoying a relief of up to 80 percent, it means Senator Keg is exempted from paying excise duty of Sh18 per centilitre, or Sh1,800 per litre.
However, introducing a floor and ceiling on the retail price of this low-cost beer, which was introduced to combat illicit drinks, is a double-edged sword for the Nairobi Securities Exchange (NSE)-listed EABL.
Zack Munyi, EABL’s head of International Public Policy, reckoned the increase would help cover the cost of inflation. “What Sh100 could do in 2017 when the regulations were revised and what it can do now is different,” he said.
But, EABL, which is majority-owned by London-based Diageo, is concerned about the floor of Sh120, as this denies them the wiggle room to lower prices should their price-sensitive consumers be put off by the higher price.
“We are definitely worried, specifically about the lower limit conditions not to sell below Sh120,” said Mr Munyi.
“The upper limit should definitely be there to protect the consumers, but the lower limit could be counterintuitive,” he added.
Senator Keg was introduced to the Kenyan market in 2004, when the government sought to use the low-cost beer to dissuade low-income consumers from drinking illicit alcohol, which had killed several people and left dozens blind.
From 2006, Senator Keg was exempt from excise duty, which saw the demand for it among the low-income consumers in urban areas soaring.
However, with the introduction of a 50 percent excise duty in 2013, EABL was forced to cancel contracts with sorghum farmers and stop producing the beer, stating that it was no longer financially viable.
In June 2015, the remission was increased to 90 percent before the government reduced it to the current rate of 80 percent three years later.
The popularity of the drink means the government pays more in tax refunds to EABL, which stood at Sh9.48 billion by the end of June 2023, an increase of close to a third from Sh7.3 billion in the previous period.
The government has been trying to reduce its tax expenditures, which include tax refunds, by reducing the number of exempt commodities.
