ABAK warns illegal alcohol surge is weakening legal market and state revenue

The Alcoholic Beverages Association of Kenya (ABAK), through its chairperson Kui Kinyanjui, raised the concerns before the National Assembly Public Petitions Committee on Public Petition No. 02 of 2026, calling for urgent intervention to stabilise the sector.

“We note that we are an industry in crisis, according to the latest statistics, the illicit alcohol market continues to grow in both volume and value,”said Kui Kinyanjui.

Kinyanjui told MPs that while licensed manufacturers continue to invest in the sector, illegal operators are taking advantage of gaps in enforcement and regulatory control to expand their reach.

She warned that illicit alcohol has now grown to dominate a large share of market activity, overtaking legal products in growth over the past two years.

“Illicit alcohol now accounts for 60 percent of the total market growth in the illicit market has exceeded that in the legal market over the last two years,” said Kui Kinyanjui.

ABAK said this shift has created an uneven playing field where compliant companies are struggling to compete with untaxed and unregulated goods.

According to Kinyanjui, high taxation and strict compliance requirements have made legal alcohol more expensive, pushing many consumers toward cheaper illegal alternatives.

“Legal alcohol is heavily taxed and regulated Illicit alcohol is untaxed, unregulated, and cheaper,”said Kui Kinyanjui.

The association cautioned that this has not only weakened legal businesses but also increased health risks for consumers and reduced government earnings.

It estimated that tax evasion linked to the illegal trade is costing the country huge sums annually.

“Tax leakage is the largest contributor to illicit alcohol value sales at Sh.73 billion as enforcement remains fragmented and siloed,” said Kinyanjui.

ABAK attributed the growth of illegal alcohol to weak coordination between enforcement agencies, saying the lack of a unified approach has allowed illicit networks to thrive.

It called for a coordinated system bringing together regulators, security agencies, and county governments to step up enforcement.

The association also recommended the adoption of stronger tracking systems, including digital monitoring and mandatory excise stamps, to improve control across the supply chain.

“Traceability is the single most effective tool against counterfeiting and diversion,” said Kui Kinyanjui.

ABAK said such measures would allow authorities to track alcohol from production to retail and quickly detect illegal products in circulation.

However, it warned that enforcement alone would not solve the problem unless the pricing of legal alcohol is addressed.

The association urged the government to prioritise the Draft Excise Duty (Remission of Excise Duty) Regulations, 2025, saying they are key to making legal products more competitive.

“The single most powerful and immediate lever available to Government is the swift finalisation and gazettement of the Draft Excise Duty (Remission of Excise Duty) Regulations, 2025,” said Kui.

It noted that previous efforts to introduce lower-cost alcohol had helped reduce demand for illegal products, proving that pricing plays a major role in consumer choice.

“Finalising the Regulations will form an integral part of the comprehensive solution sought by the Petition,” said Kinyanjui.

Still, ABAK warned that without aligning pricing reforms with enforcement measures, the fight against illicit alcohol would remain ineffective.

“Enforcement and traceability measures alone cannot succeed if legal products remain uncompetitively priced,” said Kui.

It urged Parliament to push the National Treasury to finalise and gazette the regulations without further delay.

“ABAK therefore respectfully requests that the Public Petitions Committee formally recommend to the National Treasury that the Draft Excise Duty (Remission of Excise Duty) Regulations, 2025, be finalised and gazetted without further delay,” said Kui.