The business of alcohol: Where State might have failed, and the way out

Youth help offload cartons of second generation brews from police lorries at Asian Quarters dumpsite in Nyeri town for destruction. [Photo: JOB WERU/Standard]

Forget the holier-than-thou sentiments from some clergy. One of mankind’s longest running rituals is brewing and drinking of alcohol. For Africans, alcohol was consumed in nearly every ceremony - secular or religious. Indeed, to appease their gods, Africans poured to the ground some drink for them to also partake in the merriment.

Today, few occasions are complete without alcohol. Drinking of alcohol is as old as culture, and it will be around as long as people continue having cultures. That is why trade in alcohol is a lucrative business across the globe. In Kenya, alcohol beverage is a veritable business that includes such companies as East African Breweries, Keroche Breweries and Sierra.

Strathmore Business School Dean George Njenga refers to a recent study that ranked Kenya as the third largest alcohol consumer after Nigeria and South Africa. Kenya has also won international accolades for such alcoholic brands as Tusker and Tusker Malt, according to Dr Njenga.

Across the continent, companies such as SAB Miller, Heineken and Diageo dominate the beer market. There are more than 2,000 alcohol beverage companies in the US alone with two giants — Anheuser-Busch Inbev and MillerCoors — controlling some 90 per cent of production. “It is evident there is a genuine alcohol business in Kenya and globally,” says Dr Njenga. Unfortunately, even as the brewers rake in their millions, hundreds of thousands of consumers are rendered hopeless, jobless, sightless or lifeless from the harmful effects of alcohol.

Hundreds of Kenyans have lost their lives after consuming illicit liquor. Each tragedy has been followed up with an intense crackdown on producers of illicit brews. Millions upon millions of litres of chang’aa, busaa, muratina, and recently, second generation drinks have been destroyed.

Still stereotyped

In 2004, what appeared a clear solution to the illicit menace, flopped. EABL introduced Senator keg to tap into the low-end drinkers. However, sales of the drink which had been enjoying 100 percent tax remission fell after the Government introduced a new excise duty on the drink in 2013. EABL doubled the price and sales dropped by 85 percent. It is believed  these drinkers went into illicit brews.

Now, the National Campaign against Alcohol and Drug Abuse (Nacada) says as at 2012 about 13 per cent of Kenyans were using alcohol. Nacada chairman John Mututho has been quoted saying that there are 2.2 million Kenyans who suffer from alcoholism. By now, the script is all too clear-after the anger that was symbolized by the smashing of bottles has subsided everything will be back to normal. That sellers will still be around, because customers will still be around. And this is because the business of alcohol as is presently constituted does not cater for the needs of the poor revellers.

Presently, East African Breweries Limited (EABL) has a 90 percent market share of Kenya’s formal alcohol market. Its closest rival is local brewer Keroche Breweries, with about 2 percent of the market. There are significant barriers to opening a brewery. One requires a lot of capital and there are supply chain, distribution and technical barriers. This dominance has made EABL operate as a monopoly for a very long time.

Producers of beer substitutes - such as the traditional brews - have struggled to find legitimacy in the alcohol market. Most of them being labelled as illicit or as are becoming common second-generation drinks. While studies have shown traditional brews such as busaa, mnazi, muratina and chang’aa are not toxic, they are still stereotyped as illicit brews.

The restrictions placed on production and supply of traditional brews has created a vacuum in the market of cheap liquor. This vacuum, according to experts, has been filled by producers of intoxicated drinks. Unlike the traditional brews which are produced through fermentation or distillation, second -generation are well-packaged, branded and distributed through formal channels as any other first generation drink.

“This culture of making things illegal is not good,” says James Shikwati, Director Inter Regional Networks. Shikwati calls for the creation of structures which would decriminalize most of the traditional brews. He explains that this structure would entail having standards which ensure that such alcoholic drinks as chang’aa, for example, are produced under healthy conditions.

“There is no vision in the minds of those who lead the cultural and social services industries. Whereas, many countries have long understood the necessity to produce locally made brews with a special local distinction, Kenya is tottering on the opposite front. It is attacking the problem of over drinking and unhealthy drinks from a myopic perspective,” says Dr Njenga.

Njenga explains that in such countries such as Spain, there are very many distinctive drinks sold and which are attractive to tourists very similar to our Muratina. “Vodka is just another label for Changaa and Busaa and can be one of the most attractive beverages in Kenya if properly studied. But myopia prevails,” he adds.

According to Njenga, the US in the 1900s followed this methodology of counteracting poor drinking habits. “The consequences were dire. The corruption was unprecedented. One cannot stop a cultural practice that is very respectable. I submit that this may be one of the reasons for dangerous local brews. But our answer to the natural human need for alcohol is far from brilliant,” says Njenga.

In Uganda, the equivalent of chang’aa is Uganda Warigi and Konyagi in Tanzania. Both drinks are legally produced in these countries. Konyagi is even one of Tanzania’s most popular imports into Kenya.

Preserve of a few

However, Gerrishon Ikiara, an economics lecturer at the University of Nairobi feels that our alcohol problem is too serious to be liberalised. The Government, he says, banned traditional brews because they were being over-consumed and destroying families. “Drastic measures should be taken to stem the proliferation of these traditional brews,” says Ikiara. He says that when people are as addicted as they are today, giving them “too much freedom is giving them a licence to kill.”

But Shikwati does not buy that. He believes that the current crisis has more to do with manner in which the alcohol industry is skewed. Shikwati believes that in the current alcoholic beverages, some players are using undue advantage to edge out their competitors.

The result has been some industry players being wrongly categorised as producers of illegal brew. “What makes this alcohol fight complicated is the fact that it is grounded in a competitive environment,” says Shikwati. “If a competitor can go to the Government to argue a case and the Government buys one side of the competition then there is one side that will lose automatically,” says Shikwati.

Moreover, retailers of alcoholic drinks have complained of difficulty in getting a business licence to sell liquor. Some have been forced to operate without a licence but have found the going tough as they have had to pay some protection fees to the police.

In his Budget Speech, the National Treasury Cabinet Secretary, Henry Rotich, said that the Government was putting in place measures to improve ease of doing business by “[reducing] procedures, time and cost of starting a business, getting electricity and registering property by at least 80 percent in 2016.”

Is it time to extend that to the all the players in the alcohol industry? Or is the business of alcohol production and distribution a preserve of a few select players? Either way, the business of alcohol, either formal or clandestine, will always be there. “After smashing all the bottles, tomorrow there will still be someone selling chang’aa,” says Shikwati.