KOLKATA: The beer and India Made Foreign
Liquor industry
in the state is staring at a major crisis with sales hitting rock-bottom following the Covid-induced lockdown and the steep increase in sales tax by the
Bengal
government this April. The beer market has seen an average de-growth of over 85% in the first three months of this financial year while for IMFL, the average fall in sales is around 30% during the same period.
The figures for IMFL, compiled by the Confederation of Indian Alcoholic Beverage Companies, show that sales fell 84% in April over the same month last year, 37% in May and 27% in June. For beer, the numbers are more dismal. Retail sales fell 100% in April over last year, 93% in May and 80% in June, a senior industry executive said.
While the April slump can be attributed to the blanket ban on
liquor
sale during lockdown, stores were allowed to open in non-containment zones from the first week of May. But the initial surge in offtake petered out and did not pick up even in June during Unlock 1. Only 2.7 lakh cases of beer were sold this June against 13.7 lakh cases in the same month last year. As for IMFL, 7.6 lakh cases were sold this June against 10.5 lakh cases in the same month last year.
Bengal sees annual sales of 1.4 crore cases of hard IMFL, including whisky, rum and vodka, and 80 lakh cases of beer. The March-July period is the peak season for beer sales.
The reason for the sharp slump, say industry insiders, is the 30% tax imposed on liquor by the state in April to shore up revenue. The consequent hike in prices was a turn-off for tipplers who shifted to cheaper brands.
A study conducted among 8,600 respondents by Local Circles India, a community social media platform, revealed that almost 50% of the respondents who consume alcohol have shifted to a lower price category in response to the recent price hike.
The CIABC, which is the apex body of the alcoholic beverage industry, has already written to the Bengal government, and some other states, to reduce the ‘Covid tax’. “It is not only detrimental for the industry but for the state exchequer as well,” Vinod Giri, CIABC director general, told TOI. The apex body has urged that the additional sales tax be not more than 5%-10%.
In its letter to the state excise department, the CIABC said: “We understand and appreciate the need to generate additional tax revenue in light of Covid impact, and hence are at pains to point out that such steep increase may actually turn out to be counterproductive. There is sufficient empirical evidence that steep price increases lead to drastic fall in sales and hence in government tax collection, thus defeating the very purpose of tax increase.”
Giri said the CIABC had presented a similar analysis to the Delhi government showing how high Covid tax severely brought down
liquor sales
and impacted the governmen’t revenues. “At the same time, we demonstrated that states like Haryana and UP, which effected moderate tax increases, managed to contain the decline and were net gainers,” he added.