High Taxation pushing India’s alcohol industry on brink of crisis: ISWAI
Taxation accounts for 67%-80% of AlcoBev product prices
New Delhi (India) : The leading trade group in India’s luxury alcoholic beverage industry, the International Spirits & Wines Association of India (ISWAI), recently voiced concern over the “High Taxation of AlcoBev Industry,” which it sees as a major threat to the development of the country’s burgeoning alcoholic beverage market. AlcoBev product prices are largely determined by taxation (67%-80%), leaving little room for suppliers and trade to maintain and manage operations.
Ms. Nita Kapoor, CEO, ISWAI, commented on the issue of high taxation by saying, “The Indian AlcoBev industry is in deep crisis due to the inflation on the one hand and high taxation on the other.” If India does not take immediate action to reduce taxes or increase product prices, the country risks a situation akin to “killing the proverbial golden goose.”
Ms Kapoor further said, “Every manufacturer –from automobile to pharmaceuticals– have raised prices, but the AlcoBev industry has been crippled because of lack of pricing freedom. The liquor industry has historically contributed 25%-40% of revenues for state governments, but higher taxes without price hikes is pushing the industry into a crisis. While India has a comparative advantage in production because of the ready availability of raw materials like molasses and grains, the country needs to rehaul its policies that will encourage greater production of volumes for exports.”
The Indian AlcoBev industry employs 1.5 million people and has an estimated market size of USD 52.5 billion (2020), which is the ninth-largest in the world.
Mr. Suresh Menon, Secretary-General, ISWAI, said, “Gross margins for makers of Indian Made Foreign Liquor during the quarter ended September were lower compared to the same period a year ago due to higher cost of ingredients. ISWAI estimates that alcoholic ingredients such as Extra Neutral Alcohol (ENA) and Barley are 12% and 46.2% more expensive than last year, while the cost of packaging material such as glass and mono cartons rose by 24.9% and 19% respectively. The paring of taxes at both central government and state government would also go a long way in helping the beleaguered AlcoBev manufacturers in India.”
About International Spirits and Wines Association of India (ISWAI):
The International Spirits and Wines Association of India (ISWAI), is recognized as an authoritative voice of the Indian Premium Alcoholic Beverage Industry, with a keen insight in government policy, is instrumental in shaping industry perspectives, driving best practices, and promoting the responsible use of alcoholic beverages.
Our members include Bacardi, Beam Suntory, Brown Forman, Campari Group, Diageo-United Spirits, Moët Hennessy, Pernod Ricard, and William Grant & Sons, global leaders in the spirits and wine industries. Our members, are strong proponents of the ‘Make in India’ ideology, having made substantial investments over the years in different states of the country to embrace indigenisation, and locally manufacturing a wide range of Indian Made Foreign Liquor (IMFL) and Bottled in India (BII) products. ISWAI members account for a substantial portion of the tax revenue generated from branded alcoholic spirits and wines across the country, apart from generating employment and business opportunities both directly, and in ancillary industries and services across states.
ISWAI is proud to be an active advocate of Responsible Drinking, and promotes the principle of ‘drink less, drink better’.