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MPs reject raising minimum alcohol unit to 750ml

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Economy

MPs reject raising minimum alcohol unit to 750ml


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Parliament buildings in Nairobi. FILE PHOTO | NMG

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Summary

  • Consumers have won relief after Parliament rejected a proposal to raise the minimum volume of alcohol in a bottle to 750 millilitres, a change that could have substantially increased the prices of the beverage.
  • Wundanyi MP Danson Mwakuwona had sought to amend the 2010 law by limiting the packaging of alcoholic products in containers of a minimum of 750 millilitres from the current 250 millilitres, to curb consumption.
  • The National Assembly’s Administration and National Security Committee, however, disallowed the proposed changes saying there were sufficient existing laws to guard against alcohol consumption among the youth.

Consumers have won relief after Parliament rejected a proposal to raise the minimum volume of alcohol in a bottle to 750 millilitres, a change that could have substantially increased the prices of the beverage.

The Alcoholic Drinks & Control (Amendment) Bill, 2020 fronted by Wundanyi MP Danson Mwakuwona had sought to amend the 2010 law by limiting the packaging of alcoholic products in containers of a minimum of 750 millilitres from the current 250 millilitres, to curb consumption and abuse among the youth and low-income earners.

The legislator had argued that the sale of alcoholic drinks in low quantity packages made it easily affordable and accessible to the youth.

The National Assembly’s Administration and National Security Committee, however, disallowed the proposed changes saying there were sufficient existing laws to guard against alcohol consumption among the youth, hence it was needless to make changes in packaging requirements.

“The proposed measures in the Bill will impact negatively on the alcoholic beverage industry consequently leading to job losses and reducing the amount of tax remitted to the government,” the committee says.

If passed, the new law would have led to an increase in the average cost of beer from the current Sh190 to at least Sh285 a bottle as manufacturers pass the increased cost to consumers.

The lowest quantities of beer brands such as Tusker Lite and Tuborg are packaged in 350 millilitres and sell at an average of Sh190 per bottle.

Spirit brands such as Kane Extra, Bluemoon and Hunters Choice are packaged in small quantities of 250 millilitres with prices ranging between Sh190 and Sh230, making them popular among low-income earners and the youth.

An increase in beer prices would have triggered a rise in consumption of cheap and illicit liquor by low-income earners who would be locked out of their favourite drinks had Parliament adopted the proposed law.

The rejection of the new packaging requirements also brings relief to the beer manufacturers who would have been forced to purchase new bottles and install new packaging lines and reduce their staff numbers due to a fall in volumes of alcohol sold.

Beer makers including the Kenya Breweries Limited (KBL) and UDV Kenya (both owned by East African Breweries) would have, for example, lost billions of shillings in writing off the current bottles and installing new packaging lines if Parliament adopted the proposed changes.

KBL petitioned lawmakers to reject the proposal, saying it would incur losses of up to Sh3.5 billion in writing off beer bottles, cans, crates and the current packaging machinery and a further Sh7 billion to install a new packaging line and acquire the 750ml bottles.

The Ruaraka-based beer maker also warned that the proposed law would force players in the alcohol value chain that includes farmers, distributors and bars to shed at least 60,809 direct and indirect jobs due to a reduction in volumes of alcohol sold.

“Reduction in the volume of alcohol sold by KBL/UDV distributors would force them to cut workforce by 33 per cent…Bars and restaurants that heavily rely on alcohol sales will have to cut 60,000 jobs with a total earning capacity of Sh1.8 billion per month,” the firm said in its petition.

The alcohol industry lost more than 50,000 jobs between March and September in the wake of the Covid-19 pandemic as the sector took a hit from the restrictions imposed to curb the spread of the disease.

Kenya shut down bars in March last year after reporting the first coronavirus case, occasioning an economic meltdown in the industry marked by thousands of job losses and permanent closure of some establishments. Bars started partial reopening in September but the sector is still struggling to regain its footing.

EABL’s net profit dropped to a six-year low on the State closure of bars to contain Covid-19 spread, highlighting the impact of the restrictions on the industry.

The brewer’s net profit dropped 39 per cent to Sh7 billion for the year ended June 2020, with net sales for the second half of the year plunging 29 per cent.

EABL then rolled out a two-year Sh532 million ($5 million) recovery fund to help pubs and bars resume trade post-lockdown.

The proposed law would have made Kenya’s packaging threshold one of the highest in the world and worsen the fortunes of an industry that is still grappling with the Covid-19 economic meltdown.

Those in breach of the proposed packaging rule risked a fine of Sh50,000, a jail term of six months or both, says the Bill whose fate now lies in the hands of the lawmakers who will vote to reject or agree to the committee’s recommendations.



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