Water was the only cold drink available to Bezawite
Andargachew, 28, in her favourite restaurant around
Bole, on Wednesday, March 2, 2011.
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
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
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
This was echoed by a restaurant owner who did not
want her name and that of her establishment to be
“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
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
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
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
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
“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
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
“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
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
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,
“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
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.