Policy Paper No. 07 of 2025 on Analysis of the Alcoholic Beverages Sector in Kenya

Abstract

The taxation of alcoholic beverages in Kenya serves two main purposes: generating government revenue and discouraging alcohol consumption. The contribution of the alcohol beverages sector in Kenya to revenue is relatively small compared to the total revenue. According to the Kenya Revenue Authority (KRA) revenue report for 2023/24, the alcohol industry contributed approximately 2.27 per cent of exchequer revenue from excise taxes, maintaining the same level as in 2022/23. These figures highlight the sector's importance as a tax base while also pointing to its limited overall impact on government revenue relative to other sectors. The alcoholic beverage industry is diverse, comprising various manufacturers that produce beer, spirits, and wine. Production of alcoholic beverages has fluctuated over time, with beer taking the largest market share while spirits and wines take up a smaller market share. The proportion of wine imports decreased from 18 per cent of total alcoholic import volumes in 2016/17 to 12 per cent in 2022/23. In contrast, the share of spirits imports increased significantly from 59 per cent in 2016/17 to 79 per cent in 2022/23. Kenya's apparent national consumption of alcoholic drinks has shown significant fluctuations in recent years, with beer and spirits being the dominant categories. The increase in the consumption of spirits points towards a change in alcohol consumption patterns driven by fiscal policies, changes in taste and preference and demographic shifts.