The Hindu Business Line : Beer sales stumble in Karnataka

Packing a punch
Beer sales have jumped 527 per cent in Punjab and 209
per cent in Haryana during April-May.
Haryana, Punjab can in fact finetune beer polices further by cutting retail licence fee, which will allow retailers to reduce margins by nearly 25 per cent.

Bangalore , July 6

Beer is no longer the preferred drink in traditional strongholds such as Karnataka as favourable policies have nearly trebled sales in northern States such as Haryana and Punjab.

The All India Breweries' Association Director, Mr Sundeep Kumar, told Business Line that with northern States such as Punjab, Haryana and Chandigarh replacing the auction system with licensing system, beer sales have grown as high as 527 per cent in Punjab and 209 per cent in Haryana during the April-May months.

In Karnataka, however, the Government decision to levy higher taxes saw beer sales nosedive by 11 per cent.

Beer prices went up by about Rs 9 to Rs 11 in the State and the average price of a 650 ml bottle of beer now is Rs 59.

Policy changes

"Changes in the policy have in fact helped Punjab and Haryana to garner higher revenues for the Government," Mr Sundeep Kumar said.

He said prices have dropped by as much as Rs 20 (per bottle) in Punjab and Haryana because of the competition among retailers.

He said the licensing system has ensured increase in the number of retailers and more competition.

Model policy for beer

He said the Food Processing Ministry's model policy for beer indicate that the ideal price of a 650 ml bottle of beer should be between Rs 40 and Rs 45, while the taxes should be at the level of 35 per cent.

"But higher taxes have ensured that half the cost of a single bottle goes towards taxes," he said.

He said the Governments of Haryana and Punjab can, in fact, finetune their beer polices further by reducing the retail licence fee, which will allow retailers to reduce their margins by as much as 25 per cent. "This will again lead to a spurt in growth and higher revenues for the Government," he said.

More changes needed

Mr Sundeep Kumar said more changes were needed for better movement of raw material across the country.

"While the raw material for beer is traditionally sourced from northern States, the beer market is in the South," he said.

"When the liquor policies were formulated, the Governments did not carve out a separate policy for beer," he said.

Another drawback is that the liquor industry is one of the few industries in the country where the manufacturer is not allowed to determine the price at which he wants to sell his brand.

"It is important to delink spirits from beer," he said.

More Stories on : Breweries | Karnataka | Industry Associations

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