BENGALURU: Beer lovers in Karnataka are quaffing with a heavier heart as the govt’s steep hike in duties on various categories of the brew took effect on Jan 20. A 650ml bottle of beer is now costlier by Rs 10-45, depending on the brand.
According to the govt, the hike aims to address a revenue shortfall in the excise department despite record liquor sales earlier this financial year. The additional excise duty has gone up from 185% to 195% of the billing price or Rs 130 per bulk litre, whichever is higher. While the price of a bottle of beer that cost Rs 100 earlier is now Rs 145, that which used to cost Rs 230 is now available for Rs 240.
Liquor vendors fear beer sales may go down by at least 10%. Confirming this, Karunakar Hegde, president of the Federation of Wine Merchants’ Associations, said the duty hikes have come at a time when market conditions aren’t favourable for the same, and the increase in beer prices will burden buyers.
“For the past week, there was no supply of beer due to the price hike. Even a week before, breweries began slowing production, and now they will need to realign their processes. As a result, there’s a shortage, the market is dry, and business is taking a hit. Purchases have already dropped 10%, and the lack of stock is impacting sales significantly,” Hegde said.
A pub chain owner in Koramangala said the govt’s decision to increase prices is another blow to the industry at a time when “there has been a noticeable drop in party-goers across the city”. “Because of job insecurity and lay-off fears, people are cautious about spending. Many pubs are struggling to recover their investments as expenses continue to rise by nearly 10% annually, while profits keep shrinking. The pub industry is currently going through a tough phase due to intense competition and financial constraints, and govt policies, including funding cuts, are adding to the challenges. Pubs are unable to absorb the losses or pass on the price hikes to customers,” he said.
According to him, because of the price change, all manufacturers have halted production to change the rate slips on bottles and other packages, and because of that, for 45 days from Jan 20, there will be less beer stock in the market. “We’re left with no beer to sell and no way to make money. The situation is dire, and the industry is struggling to stay afloat,” he lamented.
A senior excise official said the Jan 20 duty hikes were a policy decision announced as part of the state budget in March 2024 and were simply awaiting implementation. “It was part of an effort to update taxation policies that weren’t revised for several years. The focus has typically been on Indian-Made Liquor (IML), while beer duties were left unchanged for a long time. The new policy is a move to address this gap. As per procedure, we called for objections and suggestions from stakeholders, including the public and merchants, before finalising the notification. The govt reviewed these inputs before issuing the revised policy,” the official said.
