When East African Breweries Limited (EABL) released its financial results for the year ended June 2025, a six percent decline in mainstream spirits sales emerged as the only blemish in an otherwise strong performance.
This marked a sharp reversal from the 10 percent growth recorded in the previous year, when the Nairobi Securities Exchange-listed brewer reported significant growth in its popular mass-market spirit brands, including Chrome in Kenya and Uganda’s Waragi.
EABL's Chief Executive Officer Jane Karuku attributed the slump to a combination of waning consumer purchasing power and the increased consumption of illicit alcohol, which continues to undercut formal spirit sales in low-income communities.
“Where we have a challenge is in mainstream spirits,” said Mr Karuku during the investor briefing last week. "The reason this category is challenged is… [because of] a lot more pressure from their consumer discretionary spending.”
Reduced purchasing power from stagnant wages and marginal increases in pay packets has left many tipplers dashing into the black or grey markets for their favourite drink.
EABL, in partnership with market research firm Euromonitor, estimates that nearly 60 percent of alcohol consumed in Kenya today is informal – largely brewed and sold outside legal and regulatory frameworks.
The spike in illicit alcohol has not only eaten into formal sector sales but also deprived the government of vital tax revenue.
“But we should be worried about that, because it means the government is losing revenue,” Ms Karuku noted. “And within the formal players, it means we are only playing in the 40 percent… which means we are leaving a lot of revenue for businesses and the government out there down by the river.”
Adding to EABL’s woes in the mass-market category is intensifying competition from state-owned Kenya Wine Agencies Limited (KWAL), whose products – Best Gin, Best Whisky and County – have increasingly appealed to budget-conscious drinkers.
Other spirits by KWAL, whose majority shareholder is South Africa’s Distell Group, include Kibao Vodka, Kibao Gold, Hunters Choice, and Safari Whisky. The company has revitalised its product line and marketing strategy in recent years, aggressively reclaiming ground once dominated by EABL.
Generally, low-income consumers, who tend to be price-sensitive, have been priced out of their traditional tipple. While they previously responded to price increases by cutting down on volume, EABL reckons many are now opting out altogether – turning instead to cheaper, informal alternatives that promise the same high at a fraction of the cost.
The environment could get even tougher. Recent tax reforms, including a shift in how excise duty is calculated—from per litre to per unit of alcohol content—are expected to drive up prices further, especially for stronger spirits. EABL and other industry players warn that this approach, while well-intentioned, may have the unintended effect of pushing more drinkers toward illicit options.
Meanwhile, the National Authority for the Campaign Against Alcohol and Drug Abuse (Nacada) is developing a fresh policy aimed at tightening the regulatory noose. The proposals include raising the legal drinking age from 18 to 21, banning the sale of alcohol in supermarkets, and outlawing home delivery of alcoholic beverages. Critics fear these measures could significantly reshape how alcohol is accessed and consumed in the country.
In stark contrast to the struggles in the mass-market segment, EABL’s premium drinks business continues to thrive. Sales in this category – led by global brands such as Johnnie Walker and Singleton – grew by 10 percent during the review period, driven by what Ms Karuku described as a "premiumisation journey".
“Premium is back,” Ms Karuku declared. “Our premiumisation journey and activities within the organisation are starting to pay off.”
This is a boon for retailers, especially high-end clubs that tend to place hefty margins on these status-defining drinks on which wealthy patrons continue to splurge despite the economic downturn.
The resurgence of premium spirits reflects a deepening socio-economic divide. While the bulk of the population is cutting back or dropping out of the formal alcohol market altogether, a smaller, more affluent class is spending freely on high-end brands, viewing them as lifestyle statements.
Generally, salary rises in the country have lagged behind increase in the cost of living for five consecutive years, weakening workers’ purchasing power.
Despite the headwinds in certain market segments, EABL reported a strong bottom line, with net profit growing by 12 percent to Sh12.3 billion for the year ending June 30, 2025.
This allowed the brewer to declare dividends for the third consecutive year, offering reassurance to investors amid swirling speculation over the future of its principal shareholder.
UK-based Diageo, which owns a controlling stake in EABL, is reportedly mulling a potential exit from the East African market as part of a global shift towards a more asset-light operating model. While no formal decision has been announced, analysts say such a move could have far-reaching implications for the region’s alcoholic beverages industry. Ms Karuku dismissed the reports as “rumours” that she could not address.
