Nairobi — The rising cost of living coupled with a steep taxation environment in Kenya saw East African Breweries Limited (EABL) record a drop in sales in its largest market, as struggling Kenyans reduced their spend on alcohol.

The firm's financial results for the half year ended December 31 show that net sales growth regressed by 1 per cent in Kenya attributed to the tough macroeconomic environment.

This is a contrast to other EABL subsidiaries in Uganda and Tanzania where sales grew by 19 per cent and 11 per cent, respectively.

On segment basis, beer volumes in Kenya dropped by 13 per cent.

This significantly affected sales growth in the country as EABL's business is 70 per cent beer and 30 per cent spirits.

In 2022, there were multiple excise tax increases in beer and spirits in Kenya which in turn saw the beer manufacturer increase the cost of the goods.

According to EABL MD Jane Karuku, the increased cost of the items saw most consumers reduce their spend as their wallets remain strained due to the high cost of living.

"The impact on volumes denies the government potential revenues and has a compounded effect on our whole value chain.We really hope we can deal with these macro issues that are affecting Kenya as a business to drive business at EABL," she said.

Kenya's inflation rate has remained high throughout last year hitting 9.1 per cent in December as food and fuel prices soared. This has forced many households to reduce their shopping spend on non-essential items such as alcohol.

"Its been a tough year but I think the business direction has done well, we seek support from policy makers to continue sparring growth in the region," said EABL Chief Financial Officer Risper Ohaga.

The depressed sales and increased operating costs in the Kenyan market saw EABL record a flat growth in earnings for the half year posting a Sh8.7billion net profit.

The EABL Board has recommended an interim dividend of Sh3.75 per share for the period under review.