East African Breweries Limited (EABL) leading brands Tusker and Guinness are projected to register sluggish growth in the medium term due to higher taxation, the brewer’s parent company Diageo has said.
John O’Keeffe, Diageo Africa’s president, says a 43 per cent increase in excise duty on beer beginning December 2015 has adversely impacted performance of the two leading brands and that it will take time for them to bounce back.
UK-based global brewer Diageo owns 50.02 per cent of EABL. Excise tax on beer increased to Sh100 per litre from the previous Sh70 per litre, forcing the brewer to adjust its prices upwards with a depressing effect on demand for some of its products.
“While bottled beer and our overall performance in Kenya will improve in the second half, the excise duty increase has put bottled beer out of the reach of many consumers,” Mr O’Keeffe told investors during a conference call.
“It will likely take longer to get Guinness and Tusker back to consistent growth.”
Mr O’Keeffe said the brewer is in open discussions with government stakeholders on various issues including tax.