Bengaluru, popularly known as the pub capital of India, is facing a new hurdle as the state government has announced an annual hike in additional excise duty on liquor. Effective August 1, excise duty on Indian Made Liquor (IML) will increase by 20% across all slabs, while that on beer will increase from 175% to 185%. However, this year’s increase poses a significant challenge to the pub industry, exacerbated by other concurrent price increases affecting the sector.
Emphasizing the seriousness of the 20% hike, Neeta Kapoor, chief executive officer of the International Spirits and Wine Association of India, said Karnataka would become the costliest state for spirits in the country. This raises a relevant question: Can Bengaluru retain its coveted title as a pub capital while battling persistent price hikes in various sectors, including milk, gas, tomatoes and liquor? Will struggling businesses be able to withstand rising inflationary pressures?
Anirudh Kheni, Managing Partner, Daisy, MG Road, emphasizes on the cumulative impact of rising prices across sectors, creating adaptation difficulties for businesses. He commented, “The persistent rise in prices is a significant challenge for the pub industry to keep pace with the changing economic landscape.”
However, Robin Lazar, general manager of Gowkey Goose, recognizes the annual nature of the excise tax increase and remains unfazed, saying, “There is nothing to worry about. Price hike is an expected event.”
Karthik G, general manager of Babylonia, expressed concern about price hikes, especially for newly opened restobars. He explains, “As a newly opened establishment, we lack the discounts and facilities that bigger pubs get from liquor vendors. So, this price increase is challenging for us. We have to find creative ways to adjust pricing without significantly impacting our menu values.
Ankita Aravindan, owner of Backstreet Brewery, Sarjapur Road, acknowledges the annual nature of the excise duty hike and stresses the substantial impact of this year’s increase. She says, “As an industry, we expected annual growth, but the magnitude of this year’s growth has taken us by surprise. It will be really tough for the industry to deal with these challenging times. However, a slight increase in beer prices may make it a popular option on our menus.
File photo of a bar in Bengaluru | Photo Credit: Murali Kumar
Vinay Chandrasekhar, partner, Long Boat Brewing Company, agrees with Ankit and highlights the advantage of microbreweries in the face of rising prices. He confirms, “As microbreweries, we already pay taxes directly to the government, and since we produce our own beers without involving third parties, menu prices will only see a marginal increase. reflect that, such as a potential increase of ₹5 for our beers. This encourages customers to return to our establishment for a value for money experience.”
Pub owners are waiting for official circulars or notifications from the Karnataka State Bar Council to determine when they should adjust liquor prices. “We still do not have clear communication regarding the timing of the price change,” says Vinay.
Gautam PK, Founder, Stone Street by BHIVE and Casa Picosa explains, “Liquor prices will not increase immediately; We are closely monitoring how liquor brands adjust their pricing in response to the new budget. However, this year’s significant growth will present challenges for the pub industry.
Hari Sukumar, assistant vice president, operations, Hotel Royal Orchid Bangalore, acknowledges the annual price hike and its impact on the industry. He adds, “We are carefully assessing the impact on the pricing strategy of our pubs. While we understand the need for adjustments, we strive to strike a balance that is fair to both our customers and our business.
Meanwhile, Khenny is convinced that drastic changes in pub culture are unlikely. “The industry has experienced a manifold increase in input costs and weathered the storm. Clear communication with customers about the reasons behind higher prices is important. It would be unfair to assume that people will stop going out due to inflation.
Hari agrees, “The drinking culture in Bengaluru thrives on a strong social aspect of relaxing and celebrating together. I believe the price hike will not affect this aspect.
As Bengaluru’s pub industry faces the compounding effects of rising prices, pub owners are committed to finding innovative solutions to sustain their businesses. Re-evaluating pricing strategies, optimizing costs, and enhancing customer experiences are critical to retaining your loyal customer base.
Annual price hike amid economic challenges
20% hike on India-made liquor and increased beer prices raise concerns for Bengaluru pub businesses
International Spirits and Wine Association of India has warned that Karnataka is going to become costliest state for spirits
The pub industry is grappling with rising prices across sectors including milk, gas, tomatoes and alcohol