India: Row in Karnataka as state government tells major beer producers to cut on night shifts at their breweries

A row has broken out in South Western India about why the Karantaka state government has told four major international beer producers to cut out the night shift at their breweries, the Drinks Business Review reported on December 11.

The effect will be to curb output of desirable brands, and, say the brewers, cause possible shortages over Christmas and the New Year season, not only in Karanatka, which accounts for about 11% of India’s total beer consumption, but also in regions beyond.

The companies involved are Heineken-controlled United Breweries, Carlsberg, AB InBev and B9 Beverages, all of which have plants in the Mysuru district near Bengaluru, a centre of India’s high-tech industries and one of the most prosperous in the country.

They have been ordered by the state authorities to stop operations between 10pm to 6am because, they are told, of a shortage of full-time excise officials to monitor output and collect relevant taxes.

Permissions to run these “third shift” operations were granted only within the past few weeks.

However, the local authorities are being accused of manipulating the alleged staff shortages to shore up sales of Indian Made Liquours such as whiskies and rums, which generate more revenues than beers.

International spirits and beer brands are increasingly in demand as India’s middle class expands and disposable income increases.

Brews such as Kingfisher (controlled by Heineken and which holds a 36% market share) and B9’s Bira 91 are increasingly seen as stylish status symbols.

In the current fiscal year, the state government projects raising some £35m from excise duties, of which about 80% was projected to come from spirits, but it faces this being eroded by the increasing demand for premium beers.

Raising the duty on beer would be unpopular and so, it is alleged, the government is attempting to restrict its supply rather than court voter unpopularity.

A spokesman for the brewers told the local press: “We sincerely urge policymakers in the state to reconsider the decision of cancelling the third shift operation.

“This will significantly impact the state’s thriving beer industry, jeopardise employment and cause a shortage of beer around Christmas, the New Year and beyond, which makes for the peak beer season.

“This will also potentially steer retailers and consumer to stronger alcoholic beverages.”

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