Liquor companies struggle as inflation, war, taxes take a toll
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Dec 10, 2022 | Page No.: 15 | Position: Middle Left | Source: varuni khosla | Sq Cm: 323 | AVE: 258193 | PR Value: 1290965
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Liquor companies struggle as inflation war taxes take a toll Varuni Kilosla varuni k Iivemint com NEW DELHI The alco-bev sector is under tremendous pres- sure with rising costs higher taxes and shrinking margins Leading industry bodies like the International Spirits Wines Association of India ISWAI and the Confederation of Indian Alcoholic Beverage Companies CIABC said costs for alco-bev manufacturers Unlike other manufacturers the alco-bev industry has been have spiralled due to the cov- hamstrung because of a lack of pricing freedom STOCK id-19 crisis followed by the Russia-Ukraine war and overall States need to stop treating from bottles for their premium retail inflation the liquor industry as a guinea products which would offset a State taxes now account for pig industry and there is an part of their production cost 67-81 ofan alto-bev product s urgent need for there to be an increase Many special levies price leaving little for suppliers inflation-linked business and charges even if they are and traders to sustain and man- model The liquor industry has meant for the benefit of the age their operations the bodies historically contributed government orthe consumers alleged 25-40 of revenues for state are put in the billing price and About five years ago the governments and therefore therefore not permitted to be share of government revenues imposing higher taxes was an passed on to consumers in the sale price of alcoholic easy way out But the combina- CIABC pointed out For beverages was 60-64 Unlike tion of higher taxes without instance there is a cow cess in other manufacturers from price hikes is pushing the Uttar Pradesh a bottling fees automobiles to pharmaceuti- industry into a crisis said Nita elsewhere track and trace cals who have raised prices in Kapoor the CEO of ISWAI measure levies in other states the last two years the alco-bev She said margins of players Such taxes become a industry has been hamstrung across categories like country stranded cost to companies and because of a lack of pricing liquor premium and value have serious implications on freedom they said spirits have margin anywhere Karnataka and West Bengal shrunk about About five years between 150-100 are two states that have 8-10 on account ago the share of per case said accounted for some of the of higher taxes govt revenues in Vinod Giri highest state taxes on alcohol Additionally the sale price of directorgeneral of While in West Bengal it has companies are CIABC which alcoholic been a consistent 81 of the also facing mar- represents entire revenue pie Odisha has gin pressures beverages was domestic brewer- seen taxes shoot up in both the from rising cost of 60-64 ies such as Amrut value and deluxe segments inputs and raw Distilleries and from 73-74 to 79 Rajasthan materials such as Third Eye Distill- has increased similarly to extra neutral alcohol ENA ery We have successfully con- around 70-68 from 60-64 glass paper and transportation vinced some states on the respectively Uttar Pradesh has fuel which have added another unfairness of forcing compa- also seen a rise ofabout 10 per- T150-200 per case in costs to nies to bear these taxes but centage points in state taxes most companies While other some other states continue to from 58-68 in both catego- industries can pass on input be reluctant largely due to a ries In Maharashtra taxes have cost increase as they wish alco- perceived fear of an adverse gone up marginally from 68 holic beverages prices are con- impact on sales if prices go up in 2016-17 to 2021-22 in the trolled by states and compa- added Giri value segment and from 63 to nies have no option but to bear DeVANS Modern Breweries 70 in the deluxe segment it until the government agrees Ltd s chairman managing ISWAI said it collected this to allow a price increase director Prem Dewan said data from fast moving seg- To manage costs premium there is not much manufactur- ments like value and deluxe liquor manufacturers have ers can do to reduce costs with- and a bottle s MRP has been taken a decision to remove the out compromising on the prod- taken as a benchmark mono-cartons or outer boxes uct quality