• They say the Alcoholic Drinks and Control (Amendment) Bill, 2020 will lead to drastic job losses, reduce beer sales, increase cost of production and shrink farmers’ earnings.
• The concerned players are Kenya Association of Manufacturers, Cereal Growers Association, Kenya Breweries Limited and UDV Kenya Distributors.
Image: FILE
Players in the alcohol sector have opposed the bill increasing the minimum packaging of alcoholic drinks to 750ml, saying it will bring the industry to its knees.
They say the Alcoholic Drinks and Control (Amendment) Bill, 2020 will lead to drastic job losses, reduce beer sales, increase cost of production and shrink farmers’ earnings.
The players are Kenya Association of Manufacturers, Cereal Growers Association, Kenya Breweries Limited and UDV Kenya Distributors.
“KBL estimates that there will be a decline of about 30 per cent in beer sales, translating to over 6,000 tonnes decline in grain sourcing, valued at about Sh200 million in revenue losses to farmers in just six months to June 2021,” CGA chief executive Anthony Kioko said.
They submitted their memoranda to the National Assembly, where the bill was introduced, through the office of Clerk Michael Sialai.
Sialai had on January 20 invited the public to submit their memoranda on the proposed amendment as part of the public participation as required by the law.
The bill sponsored by Wundanyi MP Danson Mwakuwona amends Alcoholic Drinks Control Act, 2010 to ensure packaging of alcoholic drinks is in quantities not below 750ml.
“This is in order to deal with the menace of excessive drinking occasioned by the sale of very low quantities of alcoholic drinks making it accessible to youths,” reads the bill.
In addition, the proposed law provides for deposit refund for the purchase of alcoholic drinks in glass bottles.
This is to encourage recycling of glass bottles and to reduce environmental pollution by providing an economic incentive, it says.
However, the players have warned that if enacted, the changes will bring the sector to its knees and urged for the deletion of the clause limiting the packaging of alcoholic drinks.
In its submission, KAM said the bill will increase the cost of doing business, kill competition, and occasion massive job losses across the alcohol value chain and reduce government revenue.
“The passing of section 2 of the bill would lead to a massive write-off cost of Sh3.4 billion. All existing beer bottles, crates, plant and machinery spare parts would need to be written off at the current book value,” KAM chief executive Phyllis Wakiaga said in her submission.
Wakiaga said the manufacturers will also need to replace the beer glass packaging, crates and install new machinery to package beer at 750ml, an investment that would cost in excess of Sh7 billion.
The alcohol sector, KAM noted, supports about 500,000 people across the value chain. Thus, the implementation of this bill would lead to massive financial and job losses.
Those set to be affected are glass manufacturers, bar attendants, including cooks, clears and salespersons, transporters and distributors.
KLB and UDV Kenya Limited Corporate Relations director Eric Kiniti said the passage of the bill will lead to a massive write off cost of over Sh3.4 billion.
“KBL would need to replace the beer glass packaging, cans, crates and install new machinery to package beer at 750ml, an investment that would cost over Sh7 billion,” Kiniti said.
“On spirit products, the change to minimum packaging of 750ml will result in Sh1.2 billion loss of revenue to our packaging components suppliers due to cancellation of orders for the next six months,” he added.
UDV, on the other hand, will lose over Sh1.4 billion from write off of the smaller format consumables which will be rendered obsolete.
In addition, UDV will incur an additional cost of Sh1.4 billion to acquire new packaging components that will conform to the new format.
Transporters will also be adversely impacted, with a loss of Sh124 million in revenue due to the decline in volumes of finished products within six months of the bill being passed.
“With a decline of 30 and 40 per cent in beer and spirits volume respectively, KBL’s grain sourcing is expected to decline by 6,405 tonnes which is a Sh195.28 million loss in revenue for the grain farmers in six months to June 2021,” he said.
The bill, they said, contravenes free trade practices and international treaties. It will create a technical barrier to trade across the EAC and Africa Continental Free Trade Area markets, they said.