Explained: Why Karnataka's Beer Price Is Rising and What It Means for Kodagu
- Saritha Devaiah Ballachanda
- May 1
- 2 min read
Why is the Karnataka government planning to increase excise duty on beer?
The Karnataka government has proposed a 10% hike in excise duty on all beer brands in the state. According to the draft rules issued recently, this will raise the current excise duty from 195% of the cost of production to 205%. The government has defended this move as part of a broader effort to rationalise the excise structure and boost state revenue. However, this marks the third consecutive year that beer prices are being hiked, drawing criticism from industry stakeholders.
How will this impact beer prices for consumers?
The proposed increase in excise duty is expected to lead to a price hike of about ₹10 per bottle for premium beer brands. The exact impact will vary depending on the brand and its production cost. This additional financial burden is likely to affect regular consumers as well as businesses in the hospitality sector.
What are industry bodies saying about the proposed hike?
The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has strongly opposed the move. FKCCI president M.G. Balakrishna warned that the hike could negatively affect hospitality and tourism, two key sectors in Karnataka’s economy. He expressed concern about reduced consumer spending and potential job losses, urging the government to engage in meaningful dialogue with industry players. “We understand the need to raise revenue,” Balakrishna said, “but there needs to be a balanced approach that does not overburden businesses.”
Is liquor consumption actually increasing in Karnataka despite higher prices?
Interestingly, liquor consumption is on the rise in parts of the state, notably in Kodagu(Coorg) district. Between April and December 2024, alcohol sales in Kodagu grew by 7,206 boxes compared to the same period in 2023. This represents a nearly 1% overall increase, with 7,78,839 boxes sold in 2024 versus 7,71,633 boxes in 2023.
Which areas in Kodagu district saw the highest sales?
Among Kodagu’s three excise zones—Madikeri, Somwarpet, and Virajpet—Virajpet recorded the highest liquor sales, with 3,15,108 boxes sold in 2024. This marks a 3.5% increase over the previous year and suggests a robust demand for alcohol in the region. Officials attribute this partly to traditional and customary uses of liquor in local events and festivals.
Was there a noticeable spike in sales during festive occasions in Kodagu?
Yes, the year-end celebrations brought a significant surge. On New Year’s Eve (December 31, 2024), Kodagu district saw sales of 7,912 boxes of liquor and 4,126 boxes of beer, more than double the sales figures from the previous year’s New Year’s Eve. This suggests that, despite price hikes, festive consumption remains high.
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