Wednesday, June 07, 2006


Taking a leaf out of the Model Excise Policy mooted by the Ministry of Food Processing Industries, the states of Punjab, Haryana and Chandigarh moved from the archaic auction to a retail fee system, removing the monopolistic nature of the business which was hurting consumer, manufacturers and government interests.

Some of the advantages this will have:
  • Consumer gets a better choice of brands at reasonable prices
  • Ensures that the distribution system (especially retail) does not capture a disproportionate amount of the value chain by leveraging their monopoly
  • The retail environment improves due to increased competition
  • Illicit liquor and smuggling from the neighbouring states will stop as the prices fall in line with the neighbouring states.

These markets have already begun to see the impact of this policy change with beer prices coming down to more realistic levels.

The previous year had seen the Rajasthan government effect a similar change. As a result, beer prices in Rajasthan nosedived from almost Rs. 60 to Rs. 45 per bottle and the Government increased its revenues from Rs. 1276 crore in 2004-05 to Rs. 1350 crore in 2005-06.

On the other hand in Maharashtra, Karnataka and Orissa, the latest dose of State Excise has sent prices of the golden brew skyrocketing. In Maharashtra, a bottle of mild beer that previously cost Rs. 52 with taxes, now costs Rs. 65 – showing a whopping 25 percent jump.

Predictable the beer market has been impacted adversely with Karnataka and Orissa witnessing negative growth at – 4% and – 14% percent respective. (Apr-May06 over Apr-May05).

No comments: