Karnataka govt may increase beer prices, third time in two years

The Karnataka government is contemplating another increase in beer prices, following previous hikes in 2023 and February 2024. According to recent news reports, the prices of mainstream and premium beers are expected to rise by 10 to 20 percent. This marks the third price increase within a year. The state government officially announced the new rates on Wednesday, with the changes scheduled to take effect on January 20, 2025.

The initial 10% increase in the 2023 state budget resulted in a Rs 10-15 per 650 ml bottle rise in prices. Subsequently, another 10% increase in February 2024 led to a further Rs 15 hike per bottle. Additionally, the Siddaramaiah-led government has proposed higher excise duties on "strong beer" in August 2024, potentially marking the third price increase in just over a year.

However, despite ongoing discussions regarding a potential price hike, no final decision has been made. Excise Minister RB Thimmapur confirmed that discussions were underway, specifically for beer prices.  

“We are not planning to increase the price of liquor as of now, except for beer. We are contemplating a price hike for beer. However, we have not yet discussed this with the Chief Minister to finalise the decision,” Thimmapur said on Thursday.

The Brewers Association of India (BAI) had previously raised concerns about the combined impact of these price hikes. In October 2024, the BAI cautioned that the planned raises, in addition to the introduction of new labeling regulations and stricter alcohol content categorizations, could potentially negatively affect the beer industry and lead to a decrease in state revenue. The association urged the government to review its stance, emphasizing the possible adverse effects on consumers and the economy.

Regarding the proposed increase in excise duty on strong beer in Karnataka, there are concerns about the impact it may have on the market. The state government has suggested doubling the excise duty to Rs 20 per litre, along with raising the minimum case price to Rs 300. This could potentially lead to a significant rise in beer prices, making Karnataka one of the priciest states for beer in India, with per-bottle prices potentially increasing from Rs 95 to Rs 140.

BAI cautioned that such hikes could result in reduced beer sales, increased cross-border smuggling, and a decline in tax revenue for the state.

Karnataka, with over 11 breweries, has been a key player in the beer industry. However, the BAI is concerned that these new policies may drive companies away and impede the future growth of the industry.