At least 5,000 bags of sugar suspected to contain mercury have been stolen from the Bollore godown in Changamwe, Mombasa County.
Changamwe Sub-county police commander Daudi Loronyokwe said another 300 bags of "good" sugar were also stolen from the godown.
Mr Loronyokwe said seven people were arrested in connection to the theft of the 300 bags.
"The watchman who had been guarding the mercury sugar escaped but we are looking for him," he said.
The theft is said to have taken place in the last three weeks and is believed to have been an inside job, according to Mr Loronyokwe.
After a countyrwide crackdown on contraband sugar in 2018, Interior Cabinet Secretary Fred Matiang'i raised the alarm, saying the sweetener contained mercury.
An analysis on 1,400 bags of illegal sugar from different parts of the country found traces of mercury, results which Dr Matiang'i termed shocking.
Since the operation, the suspected bad sugar has remained in various godowns across the country.