She and her four friends and colleagues came to the restaurant to spend the sunny day they had off from work due to the national holiday, Adwa Victory Day. They ate beyeaynetu, as a result of the Easter fasting period.

Soft drinks, which used to cost 12 Br per bottle in the restaurant before the price cap imposed by the government on certain edible and non-food items, at the end of December 2010, were not available.
Of the two soft drink suppliers, East African Bottling SC has 48pc of the market share and supplies Schweppes, Sprite, Fanta, Coca-Cola, and Coke Light. MOHA Soft Drinks Industry SC, has the largest market share at 52pc and an annual growth rate of 12pc. It supplies Pepsi Cola; Mirinda Orange, Apple, and Tonic; as well as 7-UP to the market.

The cap has also affected meat, which lately often contains a lot of the fatty white meat to make up a kilogramme, which can be sold for only 52 Br.

“My friends and I hate the white meat,” Bezawite complained to Fortune about the lowering standards she attributed to the cap.

Restaurants are not interested in selling soft drinks because selling it at the imposed price [of no more than 4.20 Br, VAT included] is causing the class of the restaurant to deteriorate as everybody can afford it, Miteke Tamitru, one of Bezawite’s friends, concluded.

This was echoed by a restaurant owner who did not want her name and that of her establishment to be disclosed.

“The profit we make on soft drinks and beer has fallen dramatically to 15 cents from three Birr, which will not cover any costs incurred by providing service,” she told Fortune angrily.

The profit margin of Red Bean Café & Restaurant, located in Hayahulet, has similarly decreased, while, previously, stood at 2.50 Br per bottle, Helen Wolde, supervisor of the café, claimed.

“Before the price cap we used to sell soft drinks only during lunch time,” Helen told Fortune. “However, now we sell all 96 soft drinks, the total of the four crates we obtain from suppliers, per day. We are only selling soft drinks because it is an obligation imposed on us and out of respect for our customers.”

The price cap was introduced without considering the service provided, making it difficult for traders to continue business as usual, agreed most of the ones Fortune talked to around Piazza, Bole, and Hayahulet Mazoria.

The current market strategy, by the middle society, is to supply goods at an affordable price while quality is not that high, according to Mikias Aklilu, a lecturer at MicroLink Information Technology College. Yet, customers may pay different prices for the same product in different areas of the city, depending on the quality of the service provided, he told Fortune.

The traders at Bole might switch from beer and soft drinks to serving hard liquor because their customers can afford it; however, those in Piazza and Stadium might be forced to sell beer and soft drinks because their customers cannot afford to drink anything else, forcing the latter to expand their customers base, Mikias explained.

While it caused her to lose customers, another owner of a café around Hayahulet Mazoria is not interested in selling soft drinks because it is not profitable, she admitted to Fortune on condition of anonymity.

The activities of these traders who do not respect the price cap are to be curbed by the Ministry of Trade (MoT), the supervising authority for consumer protection, pending the establishment of the agency, which is also offering awareness training for traders at the kebele level, according to Amakele Yimam, director of corporate communications at the ministry.

Crates of soft drinks wait to be purchased by retailers.

Three weeks earlier, traders around Hayahulet Mazoria were called to a meeting with kebele officials to discuss the issue, and traders complained to the officials that the new price did not consider their expenses, such as rent and salaries for waiters, and was discouraging them from offering the same quality service as before, according to Helen, who attended the meeting.

The service of soft drinks and beer does not require heating, making the price fair, they were informed by officials. The traders disagreed, as the drinks must be refrigerated and served in an establishment furnished in a certain manner, and with a pleasant atmosphere, they claimed.

The meeting failed to provide traders with a solution and was postponed to an unidentified future date, according to Helen.

The cap has had a perhaps unforeseen effect on service providers and the quality of their service. The cap was criticised by a regular customer of Sami Special Kurt & Sami Kitfo Bet, who was not willing to disclose his name.

“Following the price cap, the previous service and quality have declined,” he told Fortune.

Soft drinks and beer are sold for eight Birr and 12 Br, respectively.

“We used to serve many famous customers and foreigners, but following the introduction of the new prices, the restaurant began to be frequented by youngsters and people with a lower income whom our previous customers are unwilling to dine with,” Asefa Desu, manager of the restaurant, told Fortune, reiterating what Miteke had said about standards.

The restaurant’s revenues have also decreased while house rent and the salaries of the 36 employees have not, raising his concerns about the possibility of closing down.

Such concerns aside, the price cap has also created an increase in demand that is not met by the limited supply, Helen claimed.

Daniel Kifle, 30, an architect who studied in the Ukraine and works for a private consultancy firm, confirms that he sometimes has difficulty finding his favourite local beer around the city. In addition, his favourite hangout, located around Meskel Flower Road, has started charging him a 20 Br entrance fee.

“I would pay any amount for a beer in exchange for the service they used to offer,” he told Fortune. “I hate this new way of claiming more money to cover their expenses.”

The three-star rated Awraris Hotel, which sells beer and soft drinks at 15 Br and 10 Br, respectively, is selling beer, but has a problem meeting the demand, Anteneh Alemu, manager of the hotel, told Fortune.

Although traders are blamed by customers for the shortage, the sellers claimed that supply depends on a limited amount available from producers.

They received 60 crates of beers and soft drinks per week, which is not enough to cover the high demand they are facing from consumers, one distributor told Fortune on condition of anonymity. He limits the number of beers sold on Monday to Thursday, but on weekends the sales volume of increases, he claimed.

Limiting the supply to restaurants and cafés creates artificial scarcity because traders do not want to sell evenly throughout the week, according to a macro economist who wished to remain anonymous. However, the shortage cannot be called artificial, since production meets the high demand, he explained.

The supply is limited by the beer companies’ estimation of sales, Dashen Brewery SC admitted. It provides beer to hotels and restaurants twice per week, based on previous determinations of the requirement of each, resulting in it meeting less than one fourth of the demand, according to Mekibib Alemu, acting manager of Dashen. The two days it takes to transport the beers from Gonder Town to Addis Abeba further contributes to the under supply, he said.

“Amhara Regional State and Gonder do not have these problems as they are located relatively close to the factory,” Mekibib told Fortune.

The production rate of beer is increasing by as much as 24pc annually, roughly double the average annual growth rate of the GDP, an estimation made by Access Capital showed. By international standards, the per capita consumption of beer in Ethiopia is very low at four litres, the research showed.

The five major breweries in the industry are BGI Ethiopia/ Castel Group as well as Dashen, Meta, Harar, and Bedele breweries; the latter three are undergoing privatisation by the Privatisation and Public Enterprises Supervising Agency (PPESA).

With plants in Addis Abeba and Kombolcha and a production capacity of 1.5 million hectolitres, BGI has 48pc of the market share, while Bedele has the smallest share, at 10pc.

Daniel, who is not expecting changes to the supply, is changing his choice of drink and switching from beer to draught while Bezawite and her friends are changing from soft drinks to flavoured Ambo mineral water, which seems to be abundantly available and does not have a price cap.

By MAHLET MESFIN,
 FORTUNE STAFF WRITER.