India: Kerala gives permits to three new breweries

Just as Kerala is scouting for resources to rebuild itself after the floods, it is now the turn of the tippler to steady the state’s coffers. The Pinarayi Vijayan government has given permits to three new breweries in the state in a bid to capitalise on the state’s high liquor consumption, the Financial Express reported on September 27.

Since as much as 40% of the beer consumed in Kerala comes from other states, the Kerala government is keen to jack up its beer production.

“Job generation is the target in allowing new breweries, though it would feed the tax kitty too,” according to state excise minister TP Ramakrishnan. “By revving up jobs and thus the economy, it would speed up the recovery,” he told FE.

Last week, the state government gave a permit to Power Infratech to set up a state-of-the-art brewery in Kinfra Industrial Park in Kochi. Earlier, Apollo Distilleries and Breweries, Palakkad and Sreedharan Distilleries, Kannur were issued permits. Sree Chakra Distilleries in Perumbavoor recently got a permit to set up a compounding, blending and bottling plant in Perumbavoor for IMFL production. Since as much as 40% of the beer consumed in Kerala comes from other states, the Kerala government is keen to jack up its beer production.

Besides the backward integration through new breweries, the state government has hiked the rates for permits in transporting raw spirits from other states to Kerala. A notification from the state taxes department last week spells out that those transporting raw spirits would have to cough up thrice the equivalent of the previous fee. For instance, the permit fee to move liquor from distilleries to warehouses and warehouses to retail outlets like bars and clubs was `500. This has been raised to `1500. “This would make a dent in IMFL sales,” says Sunil Kumar, president,Kerala Bar Hotels Association.

When the massive mid-August floods struck Kerala, the state’s monopoly liquor distributing arm Bevco had been among the first to contribute Rs 30 crore to the Chief Minister’s Flood Relief Fund, although its outlets suffered damages of about Rs 25 crore. Bevco’s August sales of IMFL surged to 19.34 lakh cases, compared with 17.07 lakh cases in July. In fact, the state had hiked sales tax and excise duties of liquor to garner Rs 230 crore in 100 days for flood relief, as a first step.

Of course, the proceeds from new breweries and the hike in liquor taxes are tiny when matched with the huge losses suffered by the state due to the recent massive floods. The World Bank and Asian Development Bank have estimated the losses at a staggering Rs 25,046-crore. However, as Vinod Kumar, a bar manager for a star hotel, puts it, at times of distress, “It is the spirit that matters.”

Total own tax revenue of the Kerala government was Rs 37,850 crore in 2017-2018 and roughly 30% of this was from assorted taxes on liquor.

In 2017-18, the state had consumed 20.8 million cases of IMFL and 11.5 million cases of beer. At more than 8 litres per person per year, Kerala retains its lead among Indian states in per capita alcohol consumption.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .