Maharashtra Drops Excise Duty on Beer and Wine, Hoping for a 10% YoY Sales Boost
Potential Boost in Alcohol Sales due to Excise Exemption Proposal in Maharashtra
It looks like beer and wine producers are about to get a significant boost from Maharashtra's decision to waive excise duty! Executives in the business spilled the tea to FE, suggesting that sales could soar by at least 10% year-on-year.
This move comes on the heels of Maharashtra sharply raising the excise duty on Indian-made foreign liquor (IMFL) from a triple to 4.5 times the manufacturing cost - that's a whopping 50-60% tax hike! Industry insiders predict this will drive consumers to look for cheaper libations in the market's lower end.
Beer and wine, being pricier options, could very well become attractive substitutes for many IMFL enthusiasts since their prices remain steady due to duty exemptions.
Fun fact: Maharashtra accounts for around 7-10% of the nation's 408-million-case strong domestic liquor market (IMFL market). With such a substantial contribution, this trend could make waves across the country!
Vinod Giri, Director General, Brewers Association of India (an apex body of beer companies in the country), notes that beer taxes have been high in Maharashtra in the past decade. Since 2009, excise duty on beer has risen by 32%, while it's only gone up by 9% on IMFL. This stagnation in the beer market, coupled with the 7% CAGR growth of IMFL year after year, goes to show why this latest move could ignite a new lease of life for the beer and wine industries in Maharashtra.
The wine sector may especially enjoy the patronage of Maharashtra. A considerable number of wineries and farmers who supply grapes are based in the state, making it an ideal region for alcohol development. Officials have expressed a need to protect the industry from price shocks to ensure its continued growth.
While the beer market in Maharashtra is relatively stagnant, growing by just 1% annually, wine consumption in the state is about half of India's overall wine market, standing at 4 million cases. The news of excise duty exemption has already sent company shares soaring, with Sula Wines jumping 13% and GM Breweries up nearly 18%!
Now, while the state plan promotes local alcohol, it also introduces the new Maharashtra-made liquor (MML) category. This grain-based alcohol will be pocket-friendly, starting at just Rs 148 for a 180-ml bottle. Plenty of speculation is surrounding GM Breweries as a potential MML producer! The cost of other liquors, like IMFL, is expected to range between Rs 205 and Rs 360 for 180 ml, a significant lift compared to the previous rates.
In conclusion, Maharashtra's decision to cut excise duty on beer and wine while jacking up the rates on IMFL is paving the way for a potential shift in consumer preferences. This move could rejuvenate the beer and wine industries, offering local manufacturers a valuable opportunity to expand their market share and grow revenue. Keep an eye on these sectors in the coming months as this trend takes shape! 🍻🍷
Finance executives may see an opportunity to increase their revenue in the market, as the reduced excise duty on beer and wine could attract consumers who were previously deterred by high taxes on Indian-made foreign liquor (IMFL). The defi sector, particularly in Maharashtra, might also benefit from this trend, as the growth of the beer and wine industries could lead to increased investments and financing needs.
