Karnataka liquor volumes flat in H1 as beer gets three cheers

Karnataka recorded a sharp rise in beer consumption in the first half of fiscal year 2026-27, with sales volumes jumping 41% in the April-September period following the state government's alcohol-in-beverage (AIB)-based excise duty regime introduced in May.

Beer sales rose to 276 lakh cases during the six-month period, up by about 81 lakh cases from a year earlier. In contrast, Indian-made liquor (IML) sales remained largely flat. Retailers sold 347 lakh cases of IML, an increase of just 4 lakh cases over the corresponding period last year, translating into growth of around 1%.

Despite weaker volume growth, IML continued to account for the bulk of excise collections. Revenue from IML stood at Rs 17,425 crore during April-September, up Rs 2,048 crore from a year ago, representing growth of 13%. Revenue from beer increased to Rs 3,378 crore, a rise of Rs 541 crore, or 19% year-on-year.


Combined revenue from beer and IML touched Rs 22,192 crore in the first six months of the financial year, registering growth of 13% over the same period last year.

Arun Kumar Parasa, president of the Karnataka Brewers & Distillers Association, said the increase in revenues was driven largely by higher additional excise duty (AED) rates in the first five tax slabs. While beer contributed significantly to volume growth, IML remained the main revenue generator because of its much larger tax base, he said. According to Parasa, IML contributes about Rs 35,000 crore annually to the state's revenues, compared with roughly Rs 7,000 crore from beer.

The consumption trend appears broadly in line with concerns raised by sections of the liquor industry when the state unveiled its revised excise policy. Under the new framework, Karnataka deregulated administered price fixation and allowed producers to decide product placement across tax slabs based on market considerations.

The revised policy reduced IML slabs to eight as the government claimed it would improve the availability of lower-priced liquor and make prices more competitive with neighbouring states such as Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra and Kerala.

Ahead of the policy rollout, domestic liquor manufacturers had urged the government to revisit the proposed structure, arguing that the regime favoured multinational premium brands and did not adequately reflect local consumption patterns. Industry executives had also cautioned that the changes could encourage a shift towards beer consumption, mirroring trends seen in several western markets.