Bengaluru pub owners brace for impact as alcohol prices to reach new heights

Bengaluru, renowned as the pub capital of India, is facing a new obstacle as the state government announces its annual increase in the additional excise duty on alcohol. Effective from August 1, the excise duty on Indian-made liquor (IML) will surge by 20% on all slabs, while beer will experience a hike from 175% to 185%. However, this year’s increase poses a significant challenge for the pub industry, amplified by other concurrent price rises impacting the sector.

Nita Kapoor, Chief Executive Officer of the International Spirits and Wines Association of India, emphasises the gravity of the 20% hike, asserting that Karnataka will become the most expensive state for spirits in the country. This raises a pertinent question: can Bengaluru maintain its esteemed title as the pub capital while grappling with the consistent price surge across various sectors, including milk, gas, tomatoes, and alcohol? Will struggling businesses be able to withstand the mounting inflationary pressures?

Anirudh Kheny, managing partner at Daysie, M G Road, emphasises the collective impact of rising prices across various sectors, creating difficulties for businesses to adapt. He remarks, “The consistent rise in prices, , poses a significant challenge for the pub industry to keep pace with the changing economic landscape.”

However, Robin Lazar, general manager of Gawky Goose, recognises the annual nature of the excise duty hike and remains unfazed, stating, “There’s nothing alarming about it. The price rise is an anticipated occurrence.”

Karthik G, general manager of Babylonia, expressed concerns about the price rise, particularly for newly opened restrobars. He explains, “As a newly opened establishment, we lack the discounts and favours that larger pubs receive from alcohol vendors. Therefore, this price rise is challenging for us. We must find creative ways to adjust pricing without significantly impacting our menu prices.”

Ankitha Aravindan, owner of Backstreet Brewery, Sarjapur Road, acknowledges the annual nature of the excise duty hike and emphasises the substantial impact of this year’s increase. She states, “As an industry, we expected the annual hike, but the magnitude of this year’s increase has caught us off guard. It will indeed be difficult for the industry to navigate through these challenging times. However, a moderate rise in beer prices might make it a popular choice on our menu.”

A file photo of a bar in Bengaluru
| Photo Credit:
MURALI KUMAR K

Vinay Chandrashekhar, partner at Long Boat Brewing Co, agrees with Ankitha and highlights the advantage of microbreweries in the face of price hikes. He affirms, “As microbreweries, we already pay taxes to the government directly, and since we produce our own beer without involving third parties, the menu prices will reflect only a marginal increase, such as a potential rise 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 alcohol prices. Vinay notes, “We still don’t have clear communication regarding the timing of the price change.”

Goutham P K, Founder of Stone Street by BHIVE and Casa Piccosa, explains, “The liquor prices won’t increase immediately; we are closely monitoring how liquor brands adjust their pricing in response to the new budget. However, this year’s significant increase will present challenges for the pub industry.”

Hari Sukumar, assistant vice president of operations at Hotel Royal Orchid Bangalore, acknowledges the annual price increase and its impact on the industry. He states, “We are carefully assessing the impact on our pub’s pricing strategy. While we understand the necessity of adjustments, we strive to strike a balance that is fair to both our customers and our business.”

Meanwhile, Kheny is sure the pub culture is unlikely to change drastically. “The industry has experienced multiple increases in input costs and weathered the storm. Clear communication with customers about the reasons behind the higher prices is key. It would be unreasonable to assume that people would stop going out due to the price rise.”

Hari concurs, stating, “The drinking culture in Bengaluru thrives on the strong social aspect of unwinding and celebrating together. I believe the price rise will not deter this aspect.”

As Bengaluru’s pub industry confronts the compounding effects of mounting price hikes, pub owners are committed to finding innovative solutions to sustain their businesses. Reevaluating pricing strategies, optimising costs, and enhancing customer experiences are crucial for retaining their loyal customer base.