A 10 per cent cut in taxes on beer and wine proposed in the fifth annual budget of Kerala for 2010-11 by Minister for finance of the state Dr T.M. Thomas Isaac on March 5, has left the beer traders and consumers in high spirits, literally.

As a result, the breweries all over the country plan to rush to Kerala to launch their brands of beer and dominate the market in a hope that the sale of beer are likely to shoot up. Undoubtedly, the firm that is likely to be greatly benefitted by this is Vijay Mallya’s United Breweries. Brands such as Kingfisher Strong, Kingfisher Lager, Zingaro, Sand Piper, London Pilsner Strong, Kalyani Strong are already favourites among consumers of Kerala.

A spokesperson of Beverage Corporation reported that of the 8.36 lakh cases of beer that were sold last month, 6.6 lakh cases were of United Breweries. In the year 2009, 171.17 lakh of liquor cases were sold out at the outlets of Beverage Corporation alone.

About 43 per cent of this was beer alone. The move, meanwhile, has not gone down well with some anti-liquor squads, mostly headed by the ecclesiastical authorities and some NGOs who have opposed the state government’s move as it would promote alcohol consumption among the youngsters.

Earlier, a soccer tournament, which was sponsored by United Breweries, was organised by a prominent political party of Kerala in memory of one of their iconic leaders. Surprisingly, free admission tickets for the final match were being doled out on purchase of two bottles of Kingfisher Strong by all the pubs of the town, who promoted this offer at the entrance of their shops.

The incident evoked strong resentment within the organising committee, for the tournament was held in the memory of a great leader who was himself a teetotaler. Speculations are flying thick and fast that the reduction of tax on beer and wine was a gesture of gratitude to the main sponsor of the tournament.

Besides reducing the tax on beer and wine, the government reportedly plans to launch a cola blended with 5 per cent alcohol in bottles labeled ‘low alcohol beverage’ in the market. Incidentally, a law may be amended in this regard in the current session of the assembly.

It is felt that the government has yielded to the pressures from Bacardi-Martini, a Delhi-based company, which has been seeking permission to launch their products in the Kerala market since 2007. Though, earlier their request was turned down earlier by the state official on the ground that it may attract more people towards alcohol and it is against the policy of the government.

The Excise Minister of the state, meanwhile, is denying the report about the scheme for launching alcohol-mixedbeverage in the state market. However, the state government is granting permission for setting up more shops for IMFL and toddy. It has, apparently, asked excise officials to submit the report on the scope and feasibility of additional liquor shops in the state. The officials have already submitted the reports to the government and the liquor policy, as presented in the new budget, is in accordance with it.

Also, the state government has decided to increase the bar licence fee for all threestar hotels in the state to Rs 28 lakh from its previous Rs 22 lakh. A sanction for more than 100 beverage shops and bars is on the anvil before their term in office is over. There are about 655 bars in the state and 45 more will start functioning by the end of this financial year.

About Rs 150 crore is filling the coffers of the state treasury in the name of bar licence fee. Additionally, the turnover tax and sales tax from these shops add to the state revenue. From a single bar alone the state government gets Rs 35 lakh from sales tax per annum. The total income from all bars is estimated to be around Rs 450 crore. The overall income from 328 shops and 16 warehouses of Beverage Corporation and 40 shops of Consumer Fed is enormous.


–M Pushpajan
http://www.ambrosiaindia.com