Keroche Breweries

In 2003, the Kenya Bureau of Standards (KEBS) refused to grant Keroche Breweries a standardization mark (permit) for its products.[21] It accused the company of making substandard alcoholic drinks. Without the KEBS mark, Keroche would not have been possible to sell its products in Kenya.[22][23] KEBS would in 2016 again seek to withdraw the permits from Keroche Breweries. This was after President Mwai Kibaki issued a crackdown order on illicit and substandard alcoholic products. Keroche Breweries, however, moved to court and won the case.[24]

Keroche Breweries has had long-running battles with the Kenya Revenue Authority (KRA) on tax. In 2015, the company was shutdown for two weeks over a backdated duty of about KSh1 billion for the ready-to-drink Viena Ice vodka. KRA ordered the company not to produce excisable goods, an essential shutdown as all alcoholic products are excisable. However, it would be re-opened after a court reversed the KRA order.[25] In 2017, the company won a decade-long court battle against the taxman over a tax bill of KSh1.1 billion (US$110 million).

In August 2019, Keroche Breweries CEO Tabitha Karanja and her husband, the company's chairman Joseph Karanja, were arrested on charges of tax evasion of KSh14 billion (US$140 million). They were accused of mis-declaring excise tax and VAT between 2015 and 2019. They were released on a cash bail of KSh10 million for the CEO and KSh2 million for her husband.[26] The matters were however referred to the Tax Appeals Tribunal, with Keroche Breweries lodging six appeals. The dispute mainly revolved around the manufacture process of the Viena Ice ready-to-drink vodka. The brewer argued that Viena Ice was not a separate product from its Crescent Vodka as all they did was to dilute it. They therefore paid excise on the vodka component of the drink rather than the full diluted product. KRA argued that as a separate product, it should have excise calculated on the total volume. The other issue in contention was the classification of its pineapple based wines. The brewer classified the wines under World Customs Organization HS Code 22.04 as fortified wine. However KRA argued that 22.04, which attracts less duty, is for grapes-based wines only and the pineapple based wined should have been classified under HS Code 22.06, which covers others. The tribunal ruled in favour of Kenya Revenue Authority on all the matters but faulted the tax authority for charging interest while the matter was in court. The matter is in appeal.[27]

Keroche Breweries in its early days, allegedly sold alcohol in cheap sachets. These are controversially believed to have contributed to alcoholism in the central region of Kenya and rural Kenya, before their ban in 2004.[28] The company has indicated that copycats infiltrated the market and copied their brands, leading to their move away from plastic bottles to using glass bottles.[29] Critics have also noted that the companies products have since mainstreamed.[28]

The Diageo owned East Africa Breweries is the dominant player in the beer market in Kenya.[30] The diversification of Keroche Breweries into beer-making disrupted the market, forcing EABL to issue two new beer brands targeted at low-income earners in 2013.[31] In 2020, EABL and Keroche Breweries became engaged in a court battle over the use of the brown Euro bottle for selling beer.[32] EABL engraves its name on beer bottles but Keroche does not. The contention is whether bottles engraved by EABL should be used exclusively for EABL products. Keroche has argued that they should be open for use since the bottles are used universally and EABL also uses Keroche bottles to package its beer.[30]