India: Vijay Mallya says beer should be treated as non-alcoholic beverage

Beer should be treated as a non-alcoholic beverage to boost its consumption across the country, United Breweries Ltd chairman Vijay Mallya was quoted as saying by Deccan Herald on September 22.

"As beer has only five percent alcohol unlike 40 percent in hard liquor or spirits, it is irrational to charge the same prohibitive tax on both the beverages," Mallya told shareholders at the company's 16th AGM here.

Noting that the per capita consumption of beer in India was two litres as against 27 litres globally, Mallya said, as a result, beer contributed five percent to the total alcohol consumed across the country, with 280 million cases sold in 2015 as against 100 million cases in 2005.

As a leader in the low-alcoholic beverage, UBL has 52 percent market share in the country, with its nearest rival having less than half of its share.

Seeking a rational regulatory and taxation policy on beer, the liquor baron said unlike in India, beer was the preferred beverage of choice in most of the world, especially for young consumers and ranked third among all beverages after water and tea.

"Decades of perverse taxation policy that equates spirits and beer had resulted in beer being prohibitively expensive as a share of the consumer's wallet. There is an urgent need for a rational regulatory and taxation policy for long-term benefits to all the stakeholders," said Mallya.

Noting that the irrational taxation policy was driving youngsters to prefer hard liquor with attendant moral and social consequences in preference to beer, he said the industry could reach an inflexion point and grow rapidly if tax on beer was in proportion to the alcoholic strength, which is five percent.

Welcoming the introduction of the Goods and Services Tax (GST) across the country, Mallya, however, said excluding the liquor industry from it would lead to imposition of punitive costs on its players.

23 September, 2015