Are Karnataka Beer Prices Set For Another Hike By 10-20%?

Following the Karnataka government's proposal to increase excise duty based on the alcohol content of beer, strong beer prices are expected to rise in the state. The Beer Association of India (BAI) has urged Chief Minister Siddaramaiah to reconsider this draft notification, as it could adversely impact beer manufacturers.

The draft suggests a price hike of 10-20% for beers with higher alcohol percentages. Additionally, the government has requested that beer producers disclose the sugar content in their products, a move that BAI has also opposed.

In its letter, BAI stated, "The proposed increase in the draft notification could raise prices by 10-20% in both mainstream and premium segments. This change would render beer unaffordable for many, with a proposed 35% tax increase in this segment."

The association warned that the government's revenue might decline due to reduced sales, estimating a potential drop of around ₹400 crore in tax revenue from beer sales as a result of the proposed changes.

BAI emphasized that major beer producers like United Breweries, AB InBev, and Carlsberg have significant investments in Karnataka, and such a proposal could deter further investment in the state. The association also expressed concerns about the requirement to disclose sugar and malt content, stating that it could mislead consumers, create unnecessary compliance burdens for manufacturers, and compromise confidential business information. "This could ultimately reduce the ease of doing business in Karnataka," the letter added.

Karnataka has revised alcohol prices twice in the last two years, making it the most expensive state for liquor among its southern counterparts.