Alcohol manufacturers including the known Balezaf and National alcohol brands are entangled in a web of macroeconomic and external pressures that have plagued their industry. Substantial price surges in raw materials, security concerns, lack of market access, and illicit traders have undermined their production and sales.

Molasses, an essential input for alcohol production, has doubled in price to 2,691 Br a quintal, while ethanol (technical alcohol) has also seen its price increase by half to 212 Br, impacting production.

Mesfin Abate, CEO of the National Alcohol & Liquor Factory and president of the Alcohol Manufacturers Association, said factories are forced to operate at low capacity while struggling to stay afloat. Established in 1905 with an annual revenue of 1.2 billion Br, the state-owned Factory has had to cut its production by half. According to Mesfin, the rise in raw material prices, security concerns, and illicit traders supplying products at cheaper prices, disrupt the market.

"The whole industry is in peril," he told Fortune.

Another prominent alcohol manufacturer, Balezaf Alcohol & Liquors Factory, has been compelled to uphold intermittent operations for the past six months, primarily due to the surge in raw material prices and lack of market access due to security concerns. According to Belay Tekle, the general manager and one of the shareholders, unprecedented price hikes of molasses, which comprises 90pc of its input, have severely impacted the production capacity.

"It's more than what we can handle," he said.

Belay notes that operational fluctuations in recent months have led to dwindling sales and revenues. Lack of market access is another concern, with 55pc of the demand in regional states, and 25pc in the Amhara Regional State, facing security issues.

"Our operation has been on and off," he said.

Spanning 38,000Sqm and employing 580 workers, Balezaf has been forced to slash its production by a quarter from its 30,000ltr capacity. This brought about a 60pc revenue decline in the past three years. Company executives then decided to double the price, which had a reverse effect on demand, declining by 30pc. Belay cites illicit marketers with low-quality outputs at cheap prices disrupting the market share of legally operating manufacturers.

"We are struggling," he said.

The industry's struggle mirrors broader challenges within Ethiopia's manufacturing sector, which remains below five percent of the GDP. Security deterioration, particularly in Oromia and Amhara regional states, has substantially affected business operations.

Alcohol manufacturers are experiencing these issues in the wake of price increases by the five sugar factories: Wonji, Metehara, Fincha, Omo Kuraz II, and III, which supply technical alcohol and molasses. They attribute their adjustment to up to 300pc production costs on their part.