IMPACT OF LIQUOR TAXES ON INDIAN ECONOMY

Taxes collected from sales of liquor in various states of India, makes up, on an average, around 12% of the state's income. Topping the list is Karnataka, which makes 18% of its income through taxes collected on Alcohol, amounting to Rs. 4,060 Crores. Gujarat, on the other end, makes a paltry Rs. 58 Crores!!

Everyone knows alcohol is available in Gujarat, and the estimates of the amount that the Government loses because of Prohibition is Rs. 2,500 crores! Around 50% of the price of a liquor bottle sold is comprised of a combination of taxes - except in Gujarat where the taxes are not paid at all since, technically, no booze is sold. Prohibition is a failed experiment. It is a self defeating system, as other countries around the world have also learnt time and time again.

The reasons are simple - for those who drink alcohol do not consider it to be an immoral act and will continue to drink alcohol and the bootleggers will oblige, no matter how hard the Government tries to enforce prohibition. Many drinkers subject to such acts, "tank" up on liquor when they drink, and prohibition is responsible for creating such an unhealthy attitude towards liquor consumption, whereas everywhere else in the world it is seen as a drink of merriment.

GUJARAT READIES FOR MALT MARCH

Prohibition background

When India gained independence from the British in 1947, all states in India were constitutionally required to have prohibition of Alcohol but none, other than Gujarat, sustained it. Prohibition has been tried in many countries around the world in the 20th century, but later removed because it failed to produce the desired results wherever it was implemented. Gujarat is no exception to that rule – in spite of alcohol prohibition; Gujarat has one of the highest consumption of alcohol in India and has created an underworld economy that tarnishes the potential of a socially vibrant and economically strong Gujarat. Today, Gujarat remains the only state in India to have alcohol prohibition and it has been estimated that the Govt. of Gujarat could generate Rs. 20,000 million in additional state revenues if alcohol were to be made legal in Gujarat.

Mission

MaltMarch shall strive to accelerate the pace of removing alcohol prohibition in Gujarat by:

1. Providing rationale, hard data and facts against prohibition
2. Jointly involving various institutions, social activists, and organizations to work together towards removal of alcohol prohibition
3. Creating transparency and suggesting a framework for gradual removal of prohibition to cope with the social and regulatory change.
   Organizational setup

The Inspiration for Malt March

'Malt March' comes, ironically, from Gandhi's Dandi March (also called Salt March) 75 years ago, which protested the salt laws of the British rule in India. Gandhi, who also said that you have the duty to disobey unjust laws, was the chief proponent of an alcohol-free India. One of the main objectives is to make a case that the context under which Gandhi instituted prohibition is not valid today. Today, alcohol prohibition in Gujarat is an outdated, corruption and crime breeding, short sighted law which must be systematically removed. Keeping up with Bapu's spirit, the Maltmarch community plans to march to the Sachivalay and have a drink in defiance of the prohibition law (date undecided).

INDIA PROVES TEMPTING PRIZE FOR INTERNATIONAL BREWERS

Major brewing groups are clamouring to get into India, which, by dint of its young population, expanding economy and rising personal disposable income offers huge growth potential.

The Indian beer market has attracted major investment from international brewing groups, such as SABMiller and Scottish & Newcastle (S&N), over the last couple of years and, given the growth forecast for the market, it is easy to see why.

Euromonitor International forecasts that Indian beer volumes will grow by over 50% over the next five years, from 9.07m hectolitres in 2006 to 13.69m hectolitres in 2011. This follows growth of 45% between 2001 and 2006.

Expected any day now is an announcement concerning the future of Mohan Meakin. The company’s steady decline in market share to less than 8% has caused intense takeover speculation. Since January, InBev, Heineken, Anheuser-Busch and SABMiller have reportedly each expressed an interest. Meanwhile, Anheuser-Busch has been linked to joint ventures with both Crown Breweries, based near Hyderabad, and the S.K. Jaipuria Group, a New Delhi-based soft drinks manufacturer. Reports have suggested that the company is planning to focus on marketing while agreeing bottling arrangements with mid-sized brewers, rather than opting for an outright acquisition.

UK-based beer group Scottish & Newcastle (S&N) is already present in India, having acquired a 37.5% stake in market leader United Breweries (UB) for US$106m in January 2005. In February, UB and S&N increased their individual stakes in their joint venture, Millennium Alcobev, by 10% each, giving them 50-50 ownership.

One of Japan’s largest beer makers, Sapporo Breweries, is reportedly seeking to enter the market either by forming a joint venture or by acquiring existing breweries. It intends to launch its ‘third beer’ brand Draft One which is a beer-like, low-alcohol (5% ABV) beverage made from pea or soy protein. Due to the absence of malt and wheat, the product is categorised as neither a regular beer nor a low-malt beer. As in Japan, this could liberate Draft One from the high taxes imposed on beer, making it more affordable to lower income consumers.

Strong beer, at around 8% ABV, is characteristic of this market. Companies like Anheuser-Busch will therefore have to introduce new, stronger variants to their portfolios if they intend to make significant inroads in the short term.

Asia Pacific Breweries (APB), the Singapore-based brewer in which Heineken owns a 42% stake, appears to be looking to boost its own portfolio. It is seeking to acquire a 76% stake in Lilasons Breweries, which owns the strong beer brand Khajuraho, present in the states of Maharashtra and Madhya Pradesh. Lilasons is seen as one of the last few independent beer breweries left in India. In May, APB acquired a 76% holding in Aurangabad Breweries for around US$18m, with an option to buy the remainder at the end of 2008, and followed this in June by forming a joint venture with the Jaipuria Group in the state of Andhra Pradesh.