Kenya’s underground alcohol market has ballooned into a $1.57 billion shadow economy that now accounts for 60 percent of all alcohol consumed in the country, according to a 2025 Euromonitor International study commissioned by the Alcoholic Beverages Association of Kenya and cited by the Anti-Counterfeit Authority.
The trade cost the National Treasury about $930 million in lost fiscal revenue in 2024, money that could have supported hospitals, schools and other public services. Illicit volumes grew 27 percent between 2022 and 2024, outpacing the legal market.
The human toll is stark. The World Health Organization estimates that alcohol consumption kills at least 14,000 Kenyans every year through noncommunicable diseases, traffic crashes, violence and acute toxicity. Many of those deaths are linked to unregulated or adulterated drinks.
“Adulterants like industrial methanol are absorbed rapidly,” a Nairobi-based public health expert and consultant physician told The Star. “Methanol metabolises into formic acid, a potent toxin that attacks the optic nerve, causing permanent blindness and destroys kidney and liver tissues within hours.”
Homemade brews such as chang’aa, busaa and muratina make up the bulk of the volume, about two-thirds of illicit alcohol by volume. Yet the biggest financial losses stem from tax leakage, counterfeit brands and smuggling. Tax leakage alone accounts for roughly $560 million to $625 million, counterfeit and illicit brands about $496 million, and smuggled alcohol another $178 million, according to the study.
Illicit spirits can cost up to 80 percent less than legal alternatives. Affordability drives demand: 74 percent of consumers cite price as a key factor. High excise taxes on legitimate products have widened the gap. Undenatured ethanol costs about $1 per litre in Kenya because of taxes, compared with about $0.30 in Uganda, creating strong incentives for cross-border smuggling.
Retail Trade Association of Kenya chief executive Wambui Mbarire said repeated tax increases have pushed consumers toward the underground market. “Repeated tax increases on alcohol have created a situation where nearly half, about 44 per cent, of all alcohol consumed in Kenya is now illicit,” she said.
Industry Principal Secretary Dr. Juma Mukhwana described the findings as a wake-up call. “The illicit market has grown bigger than the legal one. It is organised and mainstream. We must protect the legal market while preserving cultural traditions.”
ABAK Chairman Eric Githua said the study aimed to quantify the problem for policymakers. “Our aim was to help the government understand the size of the problem and identify solutions.” He warned that high taxes are driving consumers to cheaper, illegal options.
Assistant Inspector General Cunningham Suiyanka called the situation dire. “This report is a warning. My biggest enemy is a counterfeit drink. It’s deadlier than chang’aa.”
Beverly Opora of the Ministry of Interior linked the trade to broader security concerns. “It’s a major internal security risk. Many crimes are committed under its influence.”
Counterfeiters wash genuine bottles, clone labels and tax stamps, then refill them with cheap or dangerous liquor. Smuggled ethanol feeds illegal distilleries. Enforcement agencies, including the Kenya Revenue Authority, Kenya Bureau of Standards, Anti-Counterfeit Authority, NACADA and police, face a challenge that industry players say cannot be solved by raids alone.
In July, the United Kingdom issued a travel advisory urging visitors to Kenya to avoid homemade, unsealed or unusually cheap alcoholic drinks and to buy only from trusted, licensed outlets.
The formal alcohol industry contributes 2.27 percent of total excise revenue and supports an estimated 400,000 direct and indirect jobs. Sector players, regulators and consumer groups argue that any lasting response must combine stronger enforcement with structural reforms that address the price gap between legal and illicit products.
As one editorial in The Star put it, the $1.57 billion illicit alcohol economy has grown far beyond a nuisance. It is a sprawling criminal enterprise that steals from the Treasury, threatens legitimate businesses and puts lives at risk.
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