Karnataka to revise liquor prices. What does this mean and will it make your beer cheaper?

On May 11, the State Excise Department in Karnataka introduced a new alcohol excise duty structure. Under this regime, tax will now be levied on alcohol in beverages (AIB) across all spirit categories. Drinks with higher alcohol content will thus become more expensive as customers opt for drinks with lower alcohol content. Karnataka is the first state in the country to tax based on alcohol content. The structure was announced by Chief Minister Siddaramaiah in the 2026-27 budget. What does this mean for consumers? We speak to the experts to break it down.

What is the new tax structure?

The reason for the new regime is the social costs of alcohol consumption. Whether it is domestic violence or health reasons, the government wants to encourage citizens to drink with a lower alcohol content. Vinod Giri, CEO of the Brewers Association of India, says: “The structure has changed on what the government calls ‘alcohol in beverages’ taxation. All alcoholic products are made from alcohol and water. Some have more water, some have less water. If the taxes are based on value or volume, you’re actually taxing alcohol the same way as alcohol, and alcohol is the global taxation for us, not water.”

He goes on to explain the social motives behind it: “There is a WHO recommendation that alcohol taxation should be ‘proportionate to the harm’. That means the stronger the drink, the higher the tax. The Government of Karnataka has decided that the tax will be based on the alcohol in the product. The excise tax will be linked to the milliliters of alcohol in the product.”

The new consumption tax does not apply to the draft beer segment | Photo credit: Murali Kumar/ The Hindu

Beer to make it cheaper

A release from United Breweries Limited (UBL), part of Heineken, said, “This move will make popular brands like Kingfisher Premium, Kingfisher Ultra, Heineken more accessible to consumers across the state.” For example, a 650ml bottle of Kingfisher Ultra was earlier priced at ₹225, now it will be priced at ₹150. Heineken Original and Silver bottles will now cost ₹200 from ₹270 earlier. A UBL spokesperson told The Hindu, “It is important for us to support the growth of the category and make our brands affordable to consumers. The implementation of the revised prices has already started and the response from consumers is encouraging.”

However, this does not apply to all spirits, especially those with a high alcohol content. For example, Old Monk Very Old Vatted Special XXX Rum was priced at ₹765 for 750ml and will now cost ₹850. At Tonique on MG Road, the new prices are already in effect. Even if some old stock still exists with a printed price reflecting the old MRP, customers will be charged the new price.

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Will prices in bars and restaurants go down?

“Yes, customers can expect some bars and restaurants to reduce prices on select drinks and alcoholic offerings,” says Pranav Tapaswi, senior general manager, Jango Cafe and Cocktail in Sahakarnagar. “Places with a digital menu can update prices more quickly and easily, so changes can happen there more quickly. Overall, the reduction may not be dramatic, but customers could see slightly better prices or more value-oriented offerings in the future.” However, he also adds that while this provides some scope for acquisition, the benefit for restaurants is not great. “While the prices of spirits may have come down, there has been a significant increase in LPG and fuel prices, which has affected the overall profitability of F&B businesses.”

Tonique on MG Road sells drinks at new prices | Photo credit: Murali Kumar/ The Hindu

What about breweries and craft beer?

Shankar Subramaniam, co-founder of Mannheim Craft Brewery, explains: “AIB’s new excise duty policy mainly applies to bottled and canned beers and spirits. It does not apply to the draft beer segment.”

On the other hand, he is not so sure that menu prices are going down for the customer. “That’s a call that every restaurant and bar will have to make. As premium taprooms, bars and restaurants account for roughly 20 to 25% of spirits sales, the rest comes from our brewed beer and food. Food costs have gone up significantly and the LPG crisis has further adversely affected us. The cost of imported malts and the production of our craft beers have gone up as well as overhead costs, so bar costs have also gone up because of the price increase. I don’t think si that we can expect a change in the price of spirits, but since this policy is new, we will have to see how the calculation works and make an informed call.

Vinod Giri praises the move. “It takes a lot of courage from the government to take this step. Taxation of alcohol is a sensitive issue in India, not only for socio-cultural reasons, but also state revenue depends on alcohol. States are usually very risk-averse, they don’t want to experiment with taxes. It takes conviction to adopt a large-scale change. This is how alcohol is completely taxed around the world. Despite their global tax principles, they have adopted their tax principles. Commendable.”

Published – 22 May 2026 12:52 IST