Senator keg is becoming the beer of choice of many Kenyans as demand spikes up
So high is the demand for the lower-taxed Senator Keg brand that Kenya Breweries Ltd (KBL) has had to raise the output by 20 per cent.
So high is the demand for the lower-taxed Senator Keg brand that Kenya Breweries Ltd (KBL) has had to raise the output by 20 per cent just to meet the demand.
KBL managing director Jane Karuku said the brand as emerged as a favorite of many drinkers.
“Demand for Senator has been growing faster than we expected in the past year as more consumers trade up from illicit brews,” said Ms Karuku.
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As a result the brewer has installed new rackers, in a Sh800 million ($7.7m) upgrade of its Ruaraka plant to boost productions.
Ms Karuku, said the upgrade is among the stop-gap measures the brewer has put in place ahead of commissioning the Sh15 billion brewery in Kisumu within two years.
“We have responded with the newly-commissioned rackers project meant to lift our production capacity. We hope to meet demand with this,” said Ms Karuku.
Compared to mainstream beer brands which attract higher excise duty, senator is lowly taxed leading to more consumers favouring it due to its pocket friendly prices.
The brewer now plans to use Senator Keg beer which is taxed at a rate of Sh20 per litre, to drive up its earnings and offset the impact of the taxes on mainstream and premium beers.
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Sales of Senator Keg, which is dispensed in mugs from barrels in bars, recovered last year, after the government scrapped its 2013 decision to tax it at the same rate as mainstream beers such as Tusker.
Treasury last year lifted the excise tax by 43 per cent to Sh100 shillings ($1) per litre of beer, driving up retail prices by at least Sh20 ($0.2) per bottle.
In general beer companies are making tidy returns, more and more Kenya's burgeoning middle class are embracing drinking beer as a past time activity while poor Kenyans who use to consume illicit brews have ditching them for cheaper alcoholic drinks like senator keg.
Grain farmers in the North Rift have follow suit and ditched Maize and wheat in favor of barley and sorghum following an assured market and better prices.
East African Breweries net profit for the year through June rose 6 per cent to Sh8.5 billion ($82m).
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Net sales in Kenya - which makes up about 70 per cent of its profits - were up 4 per cent despite higher excise duty and drought-induced inflation while sales in Uganda rose 7 per cent but shrunk 12 per cent in Tanzania.
Ms Karuku added that the plans are on course to expand the Senator Keg distribution and retail network.
In long run, the Sh15 billion ($145m) Kisumu plant which is expected to be finished in the next two years will be key in driving sales.
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