EABL’s preferential treatment of some distributors must have triggered Bia Tosha to file a lawsuit against EABL’s contempt of court order at the Supreme Court.
Bia Tosha is vying for the restitution of its Kenyan beer distribution network against EABL’s stranglehold.
Bia Tosha seeks a fine of up to $300 million from EABL (East African Breweries Limited ) along with a penalty of six month imprisonment of directors of EABL. EABL is the most powerful beer producer in Kenya. It is owned by global alcohol giant Diageo.
The fine that Bia Tosha seeks to recoup from EABL could be one of the largest fines imposed on EABL from a distributor company in Kenya. The fine is equal to 20% of EABL’s sales.
Bia Tosha alleges that EABL continues illegal trade in routes located in three regions: Nairobi, Machakos and Kajiado, where EABL is allegedly disregarding a supreme court order. By not giving back the distributorship of routes in the three regions to Bia Tosha, EABL allegedly causes financial losses to Bia Tosha.
Bia Tosha had been in a distributorship agreement with EABL since 2006. EABL terminated the contract between the two companies violating the agreement. Therefore, Bia Tosha went to court against EABL over the breach of the contractual obligations. The demand made by the Managing Director of Bia Tosha highlights the potential profit loss of her company due to its exclusion from the beer distribution business.
… wants the country’s top court to compensate Bia Tosha $7.7 million for the losses suffered in the seven years EABL has kept it out of the beer distribution business,” as per The East African reporting.
Anne-Marie Burugu, Managing Director, Bia Tosha
Bia Tosha had largely invested in the distributorship across 22 regions covering specific areas like Athi River, Kitengela and Kawangware. Then, EABL had regained the distributorship in some routes including Baba Dogo, Dandora and Karobangi North by assigning new players into the network. The restitution of areas must have affected Bia Tosha’s overall business and profitability negatively. Bia Tosha ‘s profits had been undermined when EABL appointed the distributor, KBL (Kenya Breweries Limited) to operate sales in the distribution network.
Relentless Big Alcohol and conflicts inside alcohol industry
Alcohol producers in East Africa have been battling for control of the alcohol market for years. Alcohol industry executives say an increase in taxes, competition, drought, political instability, regulatory headwinds and millennials-led dynamics are altering the alcohol industry and causing more relentless competition, including unethical and unlawful practices.
The internal conflicts in the alcohol industry trigger competition among producers and distributors which in turn might have important implications for the patterns and levels of alcohol use in the targeted and affected communities and people.
Bia Tosha’s lawsuit against EABL’s contempt of the court order reveals the extent of influence and power of a few major alcohol companies, such as Diageo.
Diageo, the second largest alcohol producer in the world, has an appalling track record of unethical and predatory business practices. From its CEO lying on TV, to tax avoidance schemes being exposed in the Lux Leaks and the Paradise Papers, to predatory marketing campaigns, to bribery and corruption schemes around the world, to aggressive lobbying and political interference, Diageo deploys a host of unethical practices to pursue its profit maximization agenda.
