The Hindu Business Line : Northern States to fuel growth for beer industry this summer

Skewed excise policy across States along with varying trade margins will lead to disproportionate beer sales across the country this summer. Punjab, Haryana and Chandigarh are expected to fuel demand for beer due to changes in the beer selling policies whereby the auction system resulting in a monopolistic system has been removed.

"This year has seen a change in policy whereby a license fee system has been introduced in these States replacing the auction system which prevailed earlier. There will now be a draw of lots whereby manufacturers are expected to get better margins, which will get passed on to the consumers resulting in lower prices. It will be basically these three States which will be fuelling growth and sales for beer this season," says Mr Sundeep Kumar, Director, All India Brewers Association.

Meanwhile demand for beer is expected to flatten in Maharastra with the State Government's decision to hike the excise duty on beer in the State.

The decision of the Government may result in an increase in the cost of the beer by at least Rs 13 per bottle even though the State excise department has increased the levy by Rs 3 per litre. The anomalous duty structure that has a multiplier effect will cascade the price increase to around Rs 13, when the bottle reaches the shop shelf.

Mr Shekhar Ramamurthy, Vice-President, All India Brewers Association, said, "There is a gross anomaly in the duty structure and the hike will impact the sales of beer this summer. This move by the Government will lead the consumer to shift to hard liquor from beer, thus putting a question mark on its objective of increasing revenues from sales of beer."

The Beer consumption in Maharashtra is about 160 lakh (12-bottle) cases with Mumbai accounting for 40 per cent of beer sales in the State.

An excise department circular of April 13 says that "the duty on mild beer has been increased to Rs 15 per bulk litre or 100 per cent of the manufacturing cost, whichever is higher. Previously, it was Rs 12 per bulk litre or 75 per cent of the manufacturing cost.

In the others States such as Tamil Nadu and Orissa there has been no change in the beer selling policies in the past few years while in Andra Pradesh, the industry is still waiting for changes in the policy decision. Adds Mr Kumar, "It is simple policy changes which can swing beer sales every summer and sales cannot boom across the country. Being a policy sensitive issue, we have proposed a model tax policy with the Ministry of Food Processing and hope the States would adopt this policy."

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