Consumers of Keg beer will have to dig deeper into their pockets as the price of the brew is set to rise next month by Sh8.40.
This comes after the East African Breweries Limited (EABL) announced it will not absorb the excise tax change for inflation of keg beer anymore.
EABL has been shielding keg consumers from the annual inflation adjustment since the introduction of the brew that targets less-income consumers back in the year 2018.
The brewing company said it can not absorb any additional tax increases on behalf of its customers.
The adjustment on excisable goods this year was pegged at 6.3 per cent and is expected to affect such commodities as alcoholic products, cigarettes and bottled water as of October 1, 2022.
However, goods whose excise is charged as a percentage of their prices are spared from the adjustment because their tax rises annually with the changes in their prices.
Beer products will attract an excise charge of Sh142.40 per litre once the new tax rate is adjusted for inflation in October after rising from the current rate of Sh134 per litre.
Whenever excise charges hike, the consumers usually shoulder the cost unless the manufacturers step in to absorb part of the cost to protect their market share.
EABL chief financial officer Risper Genga said they note the prices of everything changing and the company will look into all different levers and get extra efficiencies.
“We do see prices of everything changing particularly where taxes are involved. We will look at all different levers and get extra efficiencies but we also see passing this to consumers although we are still engaging government,” Genga said.
“The market is facing a problem of illicit products flowing from neighbouring countries due to higher taxes locally. We are struggling as a country with the unpredictability of tax policies and it is something we need to solve.”
The brewer also looking to adjust the prices of spirits even though it could lower volume sales.