Alcohol industry players vehemently oppose raising minimum alcohol packaging to 750ml

Bottles of assorted alcoholic beverages.

KENYA – The amendment Bill that seeks to peg the minimum allowable packaging for alcoholic drinks in Kenya to be 750 millilitres, sponsored by Wundanyi MP Danson Mwakuwona, has already gone through the first reading and is now with the National Assembly’s Committee on Administrative and National Security, seeking comments from the public.

The amendment seeks to deal with the menace of excessive drinking occasioned by the sale of very low quantities of alcoholic drinks in 250ml, 300ml, 440ml and 500ml bottles, making it accessible to the youth.

To this end the Kenya Association of Manufacturers (KAM) has indicated that the move will impact the entire alcohol value chain, leading to drastic job losses, reduce alcohol sales, increase cost of production and further shrink tax income to the government.

According to the association, beer manufacturers will loss Ksh3.4 billion (US$30.9m), this is cost of writing off the returnable bottles, crates, plant and machinery at current book value.

To replace them, the manufacturers would have to make an investment of at least Sh7 billion (US$63.7m).

In a submission to the National Assembly, KAM chief executive Phyllis Wakiaga says apart from the economic impact, the law’s effects would extend to the health of drinkers who would have to resort to illicit alcohol.

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“The proposed law would leave quality alcohol out of reach of a significant portion of the consumer. Due to inaccessibility of affordable alcoholic beverages, most consumers will resort to illicit brews with dire impact to their lives, increased societal issues and the health,” Wakiaga notes.

KAM argues that since glass is sourced locally, alcohol makers would have to reduce their orders, forcing some glass makers to close.

“The proposed law would leave quality alcohol out of reach of a significant portion of the consumer. Due to inaccessibility of affordable alcoholic beverages, most consumers will resort to illicit brews with dire impact to their lives, increased societal issues and the health.”

KAM Chief Executive – Phyllis Wakiaga

Consol, a glass manufacturer, said it could cost up to Ksh169 billion to replace the close to 50 million crates of beer and the equivalent 1.25 billion single bottles already in circulation in the country.

“With the current severe economic challenges, it would be unwise for Parliament to burden the alcohol industry with a bill of Sh169 billion (US$1.5 billion). Further, the local glass industry may not even be in a position to produce all this glass within a short period to ensure industry compliance,” said Joe Mureithi, Consol’s Regional Executive for East Africa.

He further said from Consol’s observations in other countries where it has factories, having alcohol in larger packs does not necessarily result in less drinking.

“Indeed, some countries such as South Africa that have beer packs on 750ml and 1 litre are currently discussing new legislation to limit the pack size to no more that 660ml,” he said.

Consol was also critical of the proposed mandatory glass deposit system, which they said would entrench existing dominant players in the market.

“The cost of introducing a returnable glass float and supply chain is prohibitive, and favours large players at the expense of small business, and disincentivises new entrants,” said Mureithi.

At the international level, KAM says, increasing the minimum packaging standards to 750ml for Kenya would create a technical barrier to trade across the East African Community and the Africa Continental Free Trade Area markets.

“Plants and machineries are configured to produce standardised alcoholic beverages, under internationally accepted standards, which make it easy to trade across borders,” Wakiaga notes.

This trading advantage will be eroded for alcohol exporters, who will lose their ability to produce for Africa since the plant and machinery currently in use for the manufacture of export goods will be rendered obsolete or unproductive, she urgues.

Kenya currently exports alcohol to Uganda, the United Arab Emirates, Tanzania, the Democratic Republic of Congo, Rwanda, South Sudan and the Netherlands, according to a 2019 study by the Institute of Economic Affairs.

Other than KAM and Consol glass, East African Breweries Limited, Cereal Growers Association, Alcohol Beverages Association of Kenya and other sector players have vehemently opposed the proposal terming it as outrageous and retrogressive.

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