Nairobi – Illegal alcohol currently accounts for 60% of all alcohols sold, and according to a survey by Euromonitor International, the number of illegal alcohol sold in Kenya has increased by 27% since 2022.
The illegal alcohol market continues to grow in both the amount and value of the illegal market, and has grown more than the legal market over the past two years.
A study commissioned by the Association of Alcoholic Beverages in Kenya (ABAK) established that the government is losing Sh 12 billion a year, primarily due to homemade brews and illegally made spirits.
The financial loss of Sh12 billion is primarily due to the illegal production of artisanal brewing and spirit. Fiscal losses have increased 68% since 2022.
Homemade breweries like Muratina and Chang’aa make up most of the 60% illegal alcohol drinks 60% illegal alcohol, but the real money in the illegal alcohol trade comes from smuggling, counterfeit brands and tax fraud. Illegal artisan homebrewing accounts for 67% of the illegal alcohol market, but most of the illegal alcohol value lies in smuggling, counterfeiting and tax leaks.
Most of the money lost by the government is due to tax leaks, costing approximately KSH 73 billion, with a continuing fake and fake branding, which costs an estimated KSH 64 billion.
The study establishes that higher alcohol taxes push more people into cheaper and illegal options. The illegal option is driven by ethanol smuggling, which has increased, and this study found that losses from smuggling alone have doubled since 2022.
Githua said the study calls for collaborative efforts to tackle the threat of illegal alcohol in the country.
“The purpose of commissioning this study is to help the government understand the scale of the problem and identify ways to combat this problem by comparing it to the 2023 study,” Githua said.
The study was conducted to establish the prevalence of illegal alcohol in a country that has long been claiming life and harmful consumers as governments struggle to contain the threat.
Due to the secret and the informal nature of the illegal alcohol trade, official data is difficult to obtain, and government agencies often lack accurate statistics, so such activities are not regulated and reported, and therefore frequently hold legal frameworks open. Illegal alcohol continues to spread, affecting spirit, beer and wine. Counterfeit and contraband alcohol is an important type of illegal alcohol, but artisanal brewing such as busaa and changa are much more widely available and are increasingly produced on a commercial scale.
Industry Principal Dr Juma Muhuwana said the study would establish a good foundation for generating the policies and actions needed to curb the production and sales of illegal liquor.
“This latest research supports what we doubt we have. We see that the illegal market is bigger than the legal market. It’s bigger than the main market. It’s organized and bigger. As we try to eliminate illegal alcohol, we learn from the research commissioned by Abak, and we will create strategies and tactics to protect comprehensive alcohol, and to protect illegal alcohol by reading legal alcohol, representative by Karanja Nyola, the Ministry’s Secretary of Management, to maintain illegal alcohol.
Deputy Director Cunningham Suyanka described the findings as surprising, saying that Kenya is at risk of losing a generation due to illegal alcohol.
“This report is a good first step and you need to go back to the drawing and see the next step. You need to start acting now. My biggest enemy is the counterfeit drink. Fake drinks are more dangerous than Chan-a.
Beverly Opola, director-general of the Interior Ministry, explained that illegal alcohol trade is a major concern for the ministry.
“Illegal alcohol is a huge risk to internal security as it leads to organized crime. Many of our siblings in prison were affected when they committed the crime,” Opola said.
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In this study, consumers know what makes alcohol illegal, like when smuggling or counterfeiting, but they understand the risks, and many people still buy and sell illegal alcohol, and it is believed that in many communities it is normal and socially acceptable.
Research shows that consumers are motivated to buy illegal alcohol due to lower prices, accessibility through informal channels such as street vendors and housing, and their desire for a low-cost premium brand.
The prevalence of illegal alcohol is driven by a high excise tax on legal alcohol, affordability and accessibility, weakness in enforcement and corruption, and cultural acceptance of homemade brews.
To combat illegal alcohol, the study recommends three tactics: strengthening ethanol regulations, harmonizing excise taxes locally, raising consumer awareness through social media and public campaigns, and strengthening enforcement mechanisms and penalties.
