Premium Liquor Brands In Karnataka To Become Cheaper With 25% Price Reduction

Liquor enthusiasts in Karnataka can look forward to a significant price drop in premium spirits, with rates expected decrease by 15% to 25%. The State Excise Department had announced amendments to the Karnataka Excise (Excise Duties and Fees) Rules, 2024, in June. The final notification is anticipated within a week, which will officially lower the prices.

Reduction in Excise Duty Slabs

The revised rules will reduce the number of excise duty slabs for Indian Made Liquor (IML) from 18 to 16. This adjustment aims to align Karnataka's rates with those of neighbouring states. A source from the Excise Department stated, "With this, we aim to stop people from procuring premium alcohol from outside Karnataka. This will also boost sales in the state and add to our revenue."

Over the past two years, beer sales have surged due to a post-pandemic boom and extremely hot summers. Beer has become the most popular refreshment choice during these times. This new measure could help IMLs compete more effectively with the beer market.

Market Uncertainty and Production Halt

The delay in releasing the final notification has created uncertainty in the market. The Karnataka State Beverages Corporation Limited (KSBCL) has postponed issuing fresh permits due to a lack of clarity on this issue. Many distilleries have halted production because of this uncertainty.

Karunakar Hegde, Vice-President of the Federation of Wine Merchants Association, Karnataka, explained, "Many distilleries have stopped production fearing losses since they now produce at a higher cost and will be forced to sell at lower prices once the notification kicks in. Retailers also don't store premium liquor since any price changes would lead to losses."

Impact on Retail Market

The delay has caused a shortage of liquor at depot levels and could affect retail markets if not resolved soon. While prices are expected to drop after the final notification is published, sources in retail liquor businesses suggest it might take one to two months for these changes to reflect at retail outlets.

This move aims not only to curb cross-border alcohol purchases but also to increase state revenue by boosting local sales. As consumers await these changes, industry insiders remain cautious about how quickly these adjustments will impact retail pricing.