Liquor licence fee hike plan: ‘Consumers may have to take burden’

Bengaluru: After the new draft proposal to double the fees for liquor licences, right after the hike in additional excise duty on beer and economic IML, owners of breweries and pubs say customers will have to bear the burden if the plan is finalised.

Stakeholders in breweries, pubs and restaurants of Bengaluru raised the issue of the market already faltering in the last six months due to increase in prices. With the new proposal, the market could shrink more, they said. 

The continuous changes in excise structure is creating a lot of confusion for customers and affecting menu strategy, said Pravesh Pandey, managing director of a few popular restaurants.

“If the increase was 10% or 20% it was understandable. However, customers also cannot bear the full burden, especially looking at the job scenario with AI coming into the picture,” he added.

“With service charges also effectively cancelled, we had to adjust menu prices so as to pay wages. If this proposal is finalised, some of the cost has to be borne by customers and some will have to be absorbed by companies,” he said. 

Kiran Reddy, chief executive of a popular brewery in the city, said alcohol consumption had significantly come down and with the new proposal, the cost will have to be passed on to consumers.

“Liquor prices in neighbouring states are so low that people stock up on alcohol when they travel there. Although this effect may not be big, there is a cumulative effect on sales in the state,” he said.

The owner of a popular brewery in east Bengaluru said although it is understandable that the government wants to increase license fees since it hasn’t been done for nine years, the quantum of increase is questionable. 

“Post-Covid there was a frenzy in the market and people headed out a lot, that has naturally died down. The government has now artificially introduced inflation in the market. The next few months will result in many small establishments closing down. We don’t really know how increase in prices will affect customer response. We will try to talk to the government and see if they can be more sensible about this,” he added.