E-Malt.com News article: India: Forced to import beer from other states, Karnataka distillers ready to bear lower margins

Importing beer from states of Goa, Maharashtra and Andhra Pradesh will hurt Karnataka distillers' margins as they will have to incur additional import duty and transportation charges. However, the additional duty will not be added to the price, The Times of India posted on April, 20.

The Mangalore Depot of Karnataka State Beverages Corporation Limited (KSBC) is importing beer from neighbouring states following a short fall in the production due to water shortage at the brewery.

Officials in the excise department said the liquor manufacturers would lose close to Rs 4 to Rs 7 margin on a bottle of beer. However, they will be unmindful of it, as they do not want to lose their market share. The United Breweries has close to 75%-78% of the market share in the region, followed by SABMiller.

"The distillers are wary of losing their market share if consumers migrate to other brands. That is why they will absorb the additional cost even if their margins are affected,'' said and excise official.

Under Schedule D of the Karnataka Excise (Excise duties and fees Rules) 1968, an import fee of Rs 6 is levied per bulk litre on beer imported from other states. This works out to nearly Rs 2 and Rs 4 on a 330 ml and 650 ml beer bottles respectively, without taking into consideration the transportation costs. KSBC official admitted that both have to be borne by the distillers.

The excise department realized a duty of Rs 18.34 crore from the sale of 34.44 lakh litres of beer in Mangalore taluk alone in January this year. In February it was Rs 14.15 crore and 14.15 litres were sold and in March the department received Rs 15.2 crore as duty after selling 31.67 lakh litres of beer.


20 April, 2012