EABL in talks with retailers over pricing

East African Breweries Limited (EABL) has hit out on its retailers following revelations that they have been selling mainstream products at prices above the recommended retail price.

The brewer says this has affected sales, a factor that led to slow growth of revenue from beer sales.

EABL’s outgoing Managing Director Charles Ireland says retailers have been exaggerating the price of the brand with margins of up to Sh260 slowly killing the company’s positioning in the market.

“Retailers in Kenya take up a price increase from a manufacturer like ourselves and t they increase the price even more to consumers. We’ve heard example of tusker with the recommended price going from Sh120 to Sh140 but retailers take that price increase and using it as an opportunity to price tusker at 200 bob, 300 bob, 400 bob,” Mr Ireland said.

The outgoing CEO said the practice had been damaging to the business resulting to a tough second half of the year despite recording a Sh10.3billion profit for the year ended June 2016.

“When they do that they damage the business because consumers either stop drinking or they go somewhere else. In the second half the volumes fell away and part of the reason for that was this overpricing by retailers on the market,” he said.

The brewer had earlier this year been in talks with the retailers in the market over the arbitrary increase in the prices of products that had led to an impediment on the company’s cash flow.

The company had absorbed an average of Sh20 per 500ml bottle after the introduction of excise duty on December 1, 2015 that led to a Sh35 increase on the same quantity in order to ensure that consumers get products at affordable prices.

During the period under review, revenues grew by three percent to Sh66.4 billion.