Cheers! New beer in old bottle to come cheaper

Beer might just get cheaper, now that the state excise department has scrapped its decision to make it mandatory for breweries to use new bottles only. Breweries will now be able to use old, recycled bottles, which cost around Rs5, as compared to new ones, which cost around Rs17.

A senior state excise department official told dna that they had revoked the decision taken earlier this year, making it mandatory for breweries to use only new bottles. “Now, we have allowed the use of old and recycled bottles... we hope beer producers will revisit their prices,” he added, noting that the decision to make new bottles mandatory had affected production and hiked prices.

The official said reduction in prices would also push up sales. He pointed out how the consumption of Indian Made Foreign Liquor (IMFL) had risen and that of beer had fallen in the price-sensitive market by September-end, due to the economic slowdown, extended chill, foreign liquor giving tipplers a stronger kick at a lower price and other such factors.

Another official said the new bottles restriction and hike in excise duty on beer in the budget by around 30% had led to rise in the MRP.

A senior executive from a beer giant said the move would come as a relief to the industry.

However, he added, companies had not passed on the entire cost of new bottles to consumers, hitting their bottom lines and, thus, the benefit to consumers after the rollback was likely to be less.

“Theoretically, prices must come down... but it must be seen how this will be done and to what extent,” the executive said. He added that Maharashtra had little capacity in manufacturing new beer bottles which had affected beer production after the rule was imposed.

“Companies sent old bottles to states where they were allowed and diverted new bottles to Maharashtra,” he said. The change in rule will allow manufacturers to mix old and new bottles.

Another brewery official said the department was intent on them reducing the MRP. “But the government must cut the excise duty for it,”  he said. “The beer industry is facing tremendous competition... and high taxes,” said another liquor industry official. High prices in Maharashtra led to liquor being smuggled in from neighbouring states with lower prices.

“Beer prices have shot up... youth find it tough to enjoy beer and are encouraged to shift to stronger IMFL,” said Randeep Singh of Shah and Company Wines, stressing on the need to encourage mild liquor consumption.

He noted that beer prices had shot up from around Rs72-77 in January 2011 to about Rs100 for mild beer today. Singh said the manufacturers had hiked prices by around 20% due to the new bottle rule and duty hike. “No company will reduce prices as long as sales are compromised,”  he said.

How much to gain? Keep fingers crossed
A state official said reduction in prices would also push up sales. He pointed out how the consumption of Indian Made Foreign Liquor had risen and that of beer had fallen in the price-sensitive market by September-end, due to the economic slowdown, extended chill and foreign liquor giving tipplers a stronger kick at a lower price

A senior executive from a beer giant said the move would come as a relief to the industry, but added that companies had not passed on the entire cost of new bottles to consumers, hitting their bottom lines and, thus, the benefit to consumers after the rollback was likely to be less