By NYAMBEGA GISESA

NAIROBI, KENYA: At Kahawa Wendani’s “bar street,” a Nairobi suburb, where dozens of unemployed youth meet daily, the promise of creating a million jobs is hardly exciting news.

For the first time, since the divisive March 4 polls, Senator Keg has surprisingly taken over from politics.

 It has managed to unite the warring tongues.

“How now? What will we turn to?” Commented Dennis Maina, a frequent customer at the pub. When he read the Budget yesterday, National Treasury Secretary Henry Rotich said the excise tax remission on senator Keg beer introduced in 2004 to discourage consumption of illicit brews had difficulties.

Revenue collection

He noted it was hard to administratively differentiate between various beer products and senator keg, thereby posing a threat to revenue collection.

“To safeguard the original intention of this policy, I have amended the said regulation to reduce the remission by 50 per cent and to grant it only in respect of beer made from  millet, sorghum and cassava,” he said.

Senator Keg, the only local alcoholic drink exempted from excise tax, is the choice for hustlers across universities and in low-income areas.

The brand was launched in 2004, a year Obama won the US presidency. It  targeted lower-income earners. East African Breweries Ltd (EABL) convinced the State to remove excise tax entirely for its Senator Keg brand. A 300-millilitre  (ml) mug goes for Sh30 while a 500 ml mug sells at Sh45.

The company thought the State would reduce on the consumption of sometimes, harmful liquor through provision of incentives for a safer packed and taxable beer. It worked wonders.

The initial offer was a 30 per cent remission on excise tax for Senator Keg. After two years, excise tax on the beer was done away with.

According to Euromonitor, Senator Keg is the second-most popular beer in Kenya, commanding 15.3 per cent of the beer market by volume in 2011 and has earned EABL $380 million in net sales.

Higher price

At the popular Club Locust, in Kahawa  Wendani, Henry Kimeu says that he will now be forced to retail the drink at a higher price.

“I am shifting my prices upwards so as to cushion myself from the tax raise because it means that I will also be buying the Keg barrel at a higher price,” he told the Standard on Saturday. 

Kimeu said that he buys a Keg barrel at Sh3,040 and sells one barrels in a day. He anticipates the sales to go down.

In Birongo town along the Nairobi-Kisii highway, former student leader Johana Nyabochoa said a few hours after upping tax on the drink by 50 per cent, drinkers ditched Senator Keg outlets for local brew  known as (chang’aa).

According to KRA, the beer is attractive to consumers of premium brands which attract up to Sh70 a litre in excise tax.  Daigeo negotiated a similar tax deal in Ghana where it sells Ruut, a beer brewed from a local yam.

SABMiller has also secured negotiated tax deals for its low price Impala in Mozambique, and Eagle beer in Tanzania, Uganda, Zimbabwe and Zambia.