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Liquor companies struggle as





inflation  war  taxes take a toll



Varuni Khosla

varuni k livemint 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  of an 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 or the 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 fi ve years         between t50-100 

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 rev enues 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 
                                                                alto holic 
been a consistent 81  of the        also facing mar-                                 represents 
entire revenue pie  Odisha has      gin pressures           bevera ges 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 of about 10 per-   1150-200 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 Girt

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
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