Karnataka Govt Proposes Third Beer Price Hike: What’s Next For Beer Lovers?

Bengaluru: The Karnataka government is reportedly considering increasing beer prices again, after a major price hike in February 2024. According to the claims, if the beer price hike is approved, this would mark the third price rise in just over a year, leaving beer enthusiasts in the state bracing for higher costs.

The Karnataka government had increased beer prices by 10 percent in the 2023 state budget, leading to a rise of Rs 10-15 per 650 ml bottle. Months later, in February 2024, the government raised prices again by another 10 percent, adding Rs 15 more per bottle.

Further, the Siddaramaiah-led government proposed higher excise duties on “strong beer” in August 2024, a move that, if passed, would result in even higher prices. Notably, strong beer is the most popular category in Karnataka, making up about 90 percent of the market.

Karnataka Excise Minister Confirms Proposal For Another Price Hike

Karnataka Excise Minister RB Thimmapur confirmed that while the government is considering another price hike for beer, no final decision has been made yet. “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.

The Brewers Association of India (BAI) has expressed concerns about the cumulative effect of these price hikes. In October 2024, the association warned that the series of increases, along with new labelling rules and stricter alcohol content regulations, could harm the beer industry in Karnataka and ultimately reduce the state’s revenue from alcohol taxes.

The Karnataka government is also considering a big rise in excise duties on strong beer. A draft notification suggests that the excise duty could double to Rs 20 per litre, while the minimum price for a case of beer could rise to Rs 300. Following the implementation of the proposal, Karnataka’s beer prices could become some of the highest in India, with per-bottle prices potentially jumping from Rs 95 to Rs 140.

The BAI has warned that such increases could lead to decreased beer sales, drive cross-border smuggling, and ultimately lower the state’s tax revenue. With over 11 breweries operating in the state, Karnataka has been a hub for beer production. However, the BAI fears that the rising costs and new regulations could drive companies out of the state and harm future growth in the industry.

BAI Urges Government To Reconsider Proposal

The growing tension over beer price hikes has also led to a debate about the long-term impact on both consumers and the economy. While the state government is focused on raising excise duties to increase revenue, the BAI has urged the government to reconsider its position. The association believes that policies should aim to support both public health and the beer industry’s long-term growth, rather than imposing further burdens that could hurt both consumers and businesses.