Top alcohol manufacturer London Distillers oppose Ruto’s ‘straining’ taxes
Athi River-based alcohol manufacturing company, London Distillers Kenya, has opposed the hefty taxes slapped on manufacturers and the requirements to have it paid in advance.
In his statement, London Distillers Chairman Mr Mohan Galot said the new taxation schemes are making it difficult for his company to operate at full capacity, hence finding the taxes straining.
“The requirement to pay taxes in advance, has put a huge strain on the business working capital and its ability to sustain the business operations and has led to a decline in the capacity utilization as a result of lack of adequate raw materials and ability to consolidate all the factors of production,” said Mr Mohan.
The statement further went on to say that the future of alcohol spirits in the country is bleak and bound to collapse if the tax policies placed on them are not reviewed.
“The requirement to pay excise duty upfront and the increased taxation on spirits is making it impossible to continue manufacturing and serving the market. The situation has been exasperated by the fact that molasses in the country are illegally exported to neighbouring country, distilled, packaged, and comes back through informal routes flooding the market making it even more difficult for compliant companies to compete in the market.
It’s worthwhile to note that these illegal products have steadily been increasing and now stand at approximately 60% in the market,” added the statement.
London Distillers said they had formally written to relevant authorities about the illegally exported molasses, revealing this had caused a shortage in Kenya for the past six months and driving up prices from Sh 5,000 a tonne in July 2022 to approximately Sh 50,000.
“The government had intervened and suspended the export of molasses in February, which in our view, was well intended and would have significantly stabilized prices of the commodity in the country. However, the ban, due to unknown reasons save for the intense lobbying by the exporters, the ban was lifted after one month. Our prayer to concerned authorities is to ban the exportation to avoid further decline of the spirits sector which may eventually collapse if no immediate action is taken.
Major distillers such as London Distillers (K) Ltd among others have been forced to operate at extremely low capacity due to lack of molasses. This has not only affected us but also several distributors and stockiest who sell our brands. As a company we believe that this issue can be resolved promptly and eventually deliver the growth and investment plans we had set for ourselves,” continued the statement.
As spirits consumption dropped in the year ended September 2023, London Distillers also expressed concern for the bleak futures of thousands of investors and employees working in the bleak value chain.
London Distillers manufactures brands such as Safari Cane, White Pearl, Kenya King, and Napoleon Crown Brandy among tens of other brands in the whisky, gin, aperitifs, vodka, rum, and brandy categories.