Liquor companies struggle as inflation, war, taxes take a toll
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Dec 10, 2022 | Page No.: 15 | Position: Top Left | Source: Varuni Khosla. | Sq Cm: 124 | AVE: 43464 | PR Value: 217320
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Liquor companies struggle as inflation war taxes take a toll VarbniKhosla yaruni k liyemint com NEW DELHI The alco-bev sector is undertremendouspres- sure with rising costs higher taxes and shrinking margins Leading industrybodieslike the International Spirits Wines Association of India ISWAI andtheConfederation of Indian Alcoholic Beverage Companies CIABC said costs for alco-bev manufacturers Unlike other manufacturers the a ko-bey industry has been have spiralled due to the cov- hamstrung because of a lack of p ricing freedom IVO id-19 crisis followed by the Russia-Ukraine warand overall States need to stop treating from bottles for their ran 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 alco-bevproduct s urgent need for there to be an increase Many special levies price leavinglittleforsuppliers inflation-linked business and charges even if they are andtraders to sustainandman- model The liquor industry has meant for the benefit of the agetheiroperations thebalies historically contributed goverment ortheconstunels 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 ofgovernmentrevenues 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 lion 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 saidNita elsewhere track and trace cals who haveraisedprices in Kapoor the CEO of ISWAI measure levies in other states the last two years the alto-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 50-100 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 reve nues 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 been a consistent 81 of the also facing mar- alcoh olic represents entire revenue pie Odisha has gin pressures beverag es was domestic brewer- seen taxes shoot up in both the from rising cost of 60-6 4 ies such as Amrut value and deluxe segments inputs and raw Distilleries and from 73-74 to79 Rajasthan materials such as Third Eye Distill- has increased similarly to extra neutral alcohol ENA ely We have successfully con- around 70-68 from 60-64 glass paperand 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 InMaharashtra taxes have cost increase as theywish 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 from63 to nies have no option but to bear DeVANSModernBreweries 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 cando to reduce costswith- 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