Tabitha’s spirited fight in a brewing tax storm

Keroche’s phenomenal growth has seen its CEO fight and win many battles. PHOTO | BD GRAPHIC 

By JOHN KAMAU

In Summary

• While the other rookies in the brewing industry were quickly scattered after a presidential order to rid the country of illicit brands, Tabitha bought space in newspapers and went to court to defend her place.

Tabitha Karanja, the CEO of Keroche Breweries, has fought many battles – and survived. But at the moment she is facing a titanic battle for her business life.

With her Naivasha-based brewery taking on the Kenya Revenue Authority in court over a tax row, the former parastatal librarian-turned brewer is also fighting to rescue some of her products, which have been labelled by the standards body as illicit brews. In the last few weeks, and in her media interviews, the once confident Tabitha looks sullen and crestfallen.

She believes her woes are about her gutsy decision to take on foreign multinationals in both the wine and beer industry.

While the other rookies in the brewing industry were quickly scattered after a presidential order to rid the country of illicit brands, Tabitha bought space in newspapers and went to court to defend her place. Of all the private brewers in Kenya, Keroche is the largest, having grown from a small three-room factory with five employees to a multimillion-dollar facility.

This growth has seen Tabitha fight more personal battles in recent years. In 2013, she found herself in court as her two co-wives fought to snatch part of the brewery from her hands. The women and their children had filed a constitutional case at the High Court demanding benefits from the company and accusing Joseph Muigai Karanja – Tabitha’s husband and chairman of Keroche – of neglect.

They also demanded to be “recognised as equals in the family … and accorded all rights and privileges that go with being member of an elite family, including a budgetary allocation for their basic needs.”

Another demand was to be regarded as equal stakeholders and directors in Keroche, “entitled to accruing costs and benefit.”
Lastly, they wanted that both Tabitha and Karanja be compelled to disclose the investments and accounts they held and the same be shared out equally among the two co-wives.

According to court records, the story of Keroche appears to have started in 1996 when Mr Karanja decided to distribute his wealth and assets to his three wives.

Besides land, he also gave them money to start businesses. Mr Karanja was a struggling businessman – and so was Tabitha. They were then operating a hardware shop in Naivasha.

Naivasha had become the hub of emerging micro-breweries where another kingpin, the late Fai Amario – a flamboyant and eccentric businessman (formerly known as Gabriel Njoroge) – had started distilling low-end brands such as Amario’s Sherry, Pooler, Medusa, Uhuru 2000, Kata Pingu, Mahewa and Cantata.

It was this low-end segment that Tabitha decided to invest her money in and she registered Keroche.

Tabitha managed to save the brewery from the extended family, with Justice Mumbi Ngugi asserting that Keroche’s assets belong to the company “and this court cannot now be used to determine who owns what and how the company should be run.”

It was a respite for Tabitha, a mother of four, who had survived intrigues of a “very troubled polygamous family”, according to the judge.

In 2003, her 10 depots in central Kenya were closed down by the provincial administration and politicians. She also later found herself in court after the Kenya Bureau of Standards (Kebs) demanded that Keroche stops producing Viena, Vertican, Sahara and Sheer wines.

Kebs, Parliament was informed by Trade minister Mukhisa Kituyi, had tested eight of Keroche products and six failed the quality test.

“Keroche Industries Limited opted to mislead the public by purporting that Kebs had cleared its drinks for public consumption,” said Kituyi.

In 2004 MPs from central Kenya accused the brewer of distributing poisonous drinks.

“You will find that people who take these drinks become sickly and their eyes turn yellow… what is the government doing about big industries like Keroche which produce these drinks?” asked Gatundu North MP Kariuki Muiruri.

Another battle that Keroche faced was on the taxation base of fortified wines. The taxes imposed in 2007 by Finance minister Amos Kimunya wiped several of the brewer’s low-end products from the shelves. Keroche was on the verge of closing down and Tabitha’s dreams were slowly vanishing.

That is how the brewer came up with the ready-to-drink vodka recipe, now marketed as Vienna Ice Vodka. She also started her own beer, Summit Lager, which was launched in 2008 by Prime Minister Raila Odinga.

The taxman now wants to increase excise duty on Vienna Ice from Sh26 a litre to Sh120. In a recent interview, Tabitha complained that “this would automatically push Vienna Ice Ready-to-Drink Vodka out of the low-end market, where it has widely been accepted.”

On July 22, KRA wrote to Keroche demanding Sh1 billion in backdated duty based on the new levy. The matter is in court. At risk is the recently unveiled Sh5 billion bottling line that was acquired to mainly bottle Vienna Ice, which accounts for 40 per cent of the company’s revenue.

Tabitha thinks that her woes are part of beer wars of yesteryear as the battle for a slice of the shrinking market continues.

In the Mt Kenya region, where Keroche products were popular, the battle against illicit drinks has not spared her other products. Though her Crescent brand was among those that had not been approved by Kebs, a standoff between Keroche and State agents saw the suspension of her permits and the locking of her factory. The court has since ordered the plant be re-opened.

But the entire distribution system has been thrown into disarray and products worth millions of shillings destroyed. She is telling the courts that “brewers of legitimate alcoholic drinks should not be placed in the same basket as illegitimate brewers.”

While ordering the re-opening of Keroche, Justice George Odunga said that such “collective punishment… is an antithesis to the rule of law and in my view such actions are a recipe to chaos and disorder.”

Tabitha is, however, obliged to allow the relevant officers to inspect Keroche premises.

It is a paradox that Tabitha has won accolades both locally and internationally for her entrepreneurial spirit and was in 2010 awarded a Moran of the Order of the Burning Spear, a national honour, for her business acumen.

She told a journalist then: “I felt good, not because of me, but because of our people here… I thought it would motivate the people, the Kenyans, and show them that if you work very hard, struggle, meet all those challenges, at the end of it there’ll be somebody who will recognise you.”

To save her Crescent brand, she has to scale to the top. And that is for a woman rated among 13 other iconic women in Africa.