The beer industry has hit out at the Pramod Sawant government’s decision to increase excise duty on the beverage, arguing that the state is indirectly nudging new consumers towards stronger liquor. While calling for a reduction of excise duty on mild beer that has less than 5% alcohol content, beer makers said that the government should tax hard spirits and strong beer.
Goa remains an outlier in the country with consumption heavily inclined towards mild beer due to the favourable pricing strategy and tropical climate. With beer becoming expensive, this could change, the beer makers said.
“Beer remains the preferred choice of low-alcohol beverage for consumers to enjoy responsibly in a state that hinges heavily on tourism and excise revenue. We urge the local administration to reduce the increase in excise duty on beer that will reduce the overall sales of beer and negatively impact the industry,” said AB InBev’s vice-president for corporate affairs for South Asia, Anasuya Ray.
Known for its liberal excise regime, Goa is a preferred tourist destination that attracts over eight million domestic and international tourists annually. For a person consuming alcohol at a bar or restaurant, beer prices will jump significantly because aside from the excise duty, which will be factored into the price, 22% VAT will also be levied at bars and restaurants.
“A tourist drinking beer at a restaurant or resort will be paying close to 45% in taxes. Today, tourists from North India have already started flying in with bottles of alcohol and they drink these in their hotel rooms. At the end of the day, the government is losing revenue,” said Goa Bar and Restaurant Owners Association president, Michael Carrasco.
“If the government wants to increase its revenue, it should go ahead and increase the excise duty on strong beer and lower the taxes on mild beer, which accounts for 80% of the beer consumed in Goa,” said founder and CEO of Goa Brewing Co, Suraj Shenai. “The government should also either impose hefty taxes on small 180ml bottles of hard liquor, or completely ban such quarters or pouches of hard spirits.”
The India Beer Market Outlook 2023 report estimates that beer consumption is expected to grow by more than six per cent, with consumers expected to shift to premium brands and craft beers. Goa, which remains a bright spot for the alcobev industry, is home to several micro-breweries. The excise duty hike has dealt a body blow to them.
“This sudden increase in MRP has led to operational challenges, causing disruption in business continuity and ease of doing business in the state during the peak season of tourist inflow,” said Ray.
Shenai has an interesting argument. He points out that mild beer, consumed in the company of friends and family, is a much healthier option. “At the end of a hot day, even in the villages, the workers and farmers will sit together and share a beer because it is affordable. If beer becomes more expensive than a 180ml bottle of hard liquor, it means that the government is nudging people towards spirits with higher alcohol content, which is unhealthy and bad for society,” said Shenai.
“The government should think of creating a super mild category for beer with relaxation in duty to support low alcoholic beverages. This can be considered a good step towards moderation,” said a representative of a major beer manufacturer.