Now say Cheers with a bigger hole to your pocket: liquor retailers also hit badly

Having refrained from announcing duty hikes for liquor and related products in his budget, chief minister B S Yeddyurappa succumbed to the pressures of a sharply depleted treasury, and, said that additional excise duty (AED) would be increased on alcoholic beverages while the profit margin of liquor retailers would be decreased. The structure of AED on the IMFL (Indian made foreign liquor) would be revised.

Presently, in the state, the retailers are entitled for a profit margin of 20%. This will come down with the new move. It isn’t consumers alone who will have to fork out more. Liquor retailers will have to settle for lower profits as new tax measures that erode their bottom-line will be introduced.

The retailers have to pay annual renewal license fees of Rs.3 lakhs for wine shops and 5.5 lakhs for bars. No doubt the inflation number has come down and tomorrow it will be in negative for sure but the costs for running the business is growing day by day.

A bar owner told this blog, how do we recover this 5.5 Lakhs paid as license fees when our margin is brought down from 20%. We have so many other expenses of running the bar, where will we get that from and to add to all this the number of Dry days have increased to about 25 days in a year, which is a great loss to us. He added, how one can sustain a business when you have just 10 % margin and pay a fee of Rs.600 a day.

Price Calculation methodology:
A bottle of KF would cost Rs.65 MRP which was sold by wine shops for Rs.70. so landing price = 65 -20%= 52 Plus tax

Now after the new AED same becomes 67 -10%= 61.00rs Plus tax
So in short the retailer’s margin is reduced by Rs.9 plus tax

So KF beer which was 65+5 =70 is now 70+9+5 =84. The additional Rs.5 is normally taken for chilling.

MRP is applicable for Wine shops as they have to sell as retail outlets. As a bar one can charge higher as they have Service and other overheads.
Moreover in Belgaum a lot of Military stuff (Liquor from Military canteen) is sold illegally. So the retailers pay taxes and they go without any thing.

Prices of few brands of IMFL:
KF Beer –Old rate Rs. 70 New rate 84

Knock Out – Old rate 80 New rate Rs.95

Fosters – old rate 80 New rate 90

DSP - (180ml) old rate 68 New rate 80

DSP Black – (180 ml) Old rate 75 New rate 90

8pm – (180ml) Old rate 70 New rate 75

Smirnoff – Old rate Rs.150 New rate 160

Disclaimer: Neither this blog nor the author is in favour of drinking nor do they intend to promote drinking. This is just an aspect of life which many don’t know.