Karnataka records decline in liquor sales in August after rise in excise duty, say Officials
Karnataka government's increased duty on liquor has led to a decline in sales and revenue, with only 21.87 lakh boxes of Indian Made Liquor (IML) sold in the first half of August, a 14.25% decrease from the same period last year. The recent hike has made Karnataka the costliest state for spirits in India, potentially hindering the growth of premium liquor brands.
Bengaluru: With the poll promises estimated to cost the government close to ₹ 52,000 crores, in the last budget Karnataka government had increased the target revenue-generating departments.
While presenting his first budget since the Congress government was voted to power in Karnataka, chief minister Siddaramaiah increased duty on all 18 slabs of Indian Made Liquor (IML) by 20% and on beer by 10 %. The revenue target for the excise department’s target was also hiked to ₹ 36,000 crore.
However, the government’s plans seem to have taken a hit as according to the statement from the Federation of Wine Merchants’ Association, Karnataka, the first two weeks of August have seen a significant decline in both sales and revenue.
Despite positive figures in July, in the first half of August, only 21.87 lakh boxes of IML were sold, marking a 14.25% decrease from the sales recorded during the same period in August 2022. “The new prices came into effect from July 20 and sales of the old stock would have continued till the end of the month. But after the new prices have come, the demand has reduced,” an official of the association said.
He pointed out that when prices were lower in June, there was an increase in demand. While 54.89 lakh boxes were sold in July 2022, 65.46 lakh boxes were sold in July 2023. Similarly, sales of beer saw a 26.83% rise in July 2023 when compared with the sales in the corresponding period in 2022.
“But in August, there is an increase in beer sales in the first 15 days of August 2023. The beer consumption had increased by 21.07% increase compared to the corresponding period in 2022,” the official added.
According to industry experts, the recent hike had made Karnataka the costliest state for spirits in India. “The State’s tax structure, which accounts for 80% of the maximum retail price, could hinder the growth of premium liquor brands and foster informal supply channels,” a merchant association member said requesting anonymity.
The excise department officials were not available for comment.