Excise duty hike dampens liquor industry’s spirits

Liquor sales in the state have taken a hit following a hike in excise duty on alcohol. A 20% hike in the existing rates of additional excise duty on Indian made liquor prompted the consumers to switch to cheaper brands, thus bringing down overall revenue generated from sales, according to officials and store owners. 

The hike in excise duty was announced during the state budget on July 7 and was implemented from July 20. Between that period, many retailers bought up to three times of their bulk alcohol orders to replenish their stocks and sell immediately, which might have contributed to falling sales in August, noted sources in the know.

A senior official from the excise department noted that the situation was not one to raise an alarm. “This dip in sales and consumption by at least 10% happens every year during the Shravan month (this year, July 23-August 22) as many people refrain from consuming alcohol,” he explained. 

He said that the sales would see an uptick by the end of August or beginning of September.

Karunakar Hegde, Bengaluru divisional president, Federation of Wine Merchants Association, Karnataka, said that there was at least a 10 to 15% fall in sales in the state. One of the biggest reasons why this was happening was because people are switching to more affordable brands, affecting overall sales and profits. “Sales of higher-end brands of liquor such as scotch and whiskey are suffering as charges per bottle have gone up drastically. So people are going for brands that are in the lower segment. Naturally, the quantum of turnover reduces,” he remarked. 

Some districts in the state are also selling liquor bought from other states that levy lesser tax on alcohol than Karnataka, which is not only attracting a large customer base, but also encouraging the fake liquor business to boom, he added. He expressed optimism that the situation would improve by September.

Multiple liquor stores across Bengaluru selling alcohol at MRP noted that a similar consumer behaviour was being observed at their stores. Stores on Outer Ring Road, Kothnur, Hulimavu, and Gandhinagar, noted that while sales have remained more or less predictable, they have noticed a shift in preferences among their consumers, which has hit their profits. 

Cut-off box - Sale of hard liquor dips beer soars 
A note shared by the association on August 18 included data on comparative sales figures of alcohol and beer in the state from the Karnataka State Beverages Corporation Limited Bengaluru for the months of August in 2022 and 2023. The data showed that the combined quantity of Indian Made Liquor and beer sold between August 1 to 15 2023 was a 4% decrease at 34.39 lakh carton boxes (CBs) from the previous year’s sales of 35.85 lakh CBs. Interestingly the sale of beer in the same period has gone up 21.07% – from 10.34 lakh CBs last year to 12.52 lakh CBs this year.