Karnataka’s proposed overhaul of liquor taxation could lead to lower prices for premium whisky brands while making strong beer more expensive, according to a note by JM Financial.
The state government has released a draft excise policy that shifts the way alcohol is taxed, moving from a bulk litre-based system to one based on alcohol content. While the policy is yet to be finalised, early calculations suggest it could significantly alter retail prices across segments.
Premium whisky may get cheaper
For Indian-made foreign liquor (IMFL), the biggest change is a simplification of the duty structure. The number of tax slabs has been reduced from 16 to 8, and duties will now be calculated based on alcohol content instead of total volume, the report added.
As per the brokerage firm, this shift appears to favour premium and above (P&A) segments. JM Financial’s estimates show that prices of several popular brands could fall. For instance, lower prestige brands such as McDowell’s, Imperial Blue, After Dark and Mansion House could see price cuts of around 9% for a standard 750 ml bottle. Mid-tier brands like Royal Stag and Royal Challenge may see smaller reductions of about 5%.
The impact could be sharper at the higher end. Premium brands such as Blenders Pride and Signature are likely to see even larger price cuts, based on initial calculations by the brokerage firm. However, mass or regular segment brands such as Officer’s Choice, DSP Black and Bagpiper could see price increases under the new system.
Detailed workings in the report show price changes ranging from an increase of about 11% for some brands like DSP Black, to a decline of over 20% for premium offerings such as Signature, the report added.
Strong beer may become costlier
The outlook is different for beer, where the policy may benefit mild beers but hurt strong ones. Under the revised structure, excise duty will be fixed at Rs 1,000 per alcohol litre, replacing the earlier system that taxed based on volume and alcohol strength. Additional excise duty will now be applied across three price slabs, the report added.
As a result, strong beers with higher alcohol content (around 8%) are likely to see price increases of about 5–7%. Brands such as Kingfisher Strong and London Pilsner Strong fall into this category.
In contrast, mild beers (with alcohol content up to 5%) are expected to become cheaper. Products such as Heineken Lager, Kingfisher Premium and Kingfisher Ultra Witbier could see noticeable price reductions, as per the brokerage firm.
In some cases, mild beer prices could fall by as much as 10–20%, while strong beer prices may rise depending on the price bracket they fall into, the report said.
Policy still in draft stage
It is important to note that the policy is still in draft form, and final timelines and implementation details are yet to be announced.