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Tag: excise duty

  • United Spirits Popular Liquor Sales Fall 22.7% to Rs 181 Crore

    United Spirits Popular Liquor Sales Fall 22.7% to Rs 181 Crore

    United Spirits posted a 22.7 per cent drop in net sales value for its popular liquor segment to Rs 181 crore during the second quarter of FY2027.

    The Diageo-owned alco-bev giant reported the decline on Wednesday, attributing the drop to increased taxes on non-local brands in Maharashtra and excise duty changes in Karnataka.

    Overall net sales value across the company nonetheless climbed 2.8 per cent to Rs 3,258 crore for the quarter, bolstered by growth in its premium and luxury liquor portfolios.

    State Levies Hit Entry Shelves

    Maharashtra created a regulatory split by establishing a preferential framework for Maharashtra Made Liquor. The state instituted a separate category for locally produced spirits with lower duty rates, while hiking excise duties on standard Indian-made foreign liquor. The tax gap handed domestic distillers an immediate retail edge across neighborhood bottle shops.

    Karnataka simultaneously overhauled its excise slabs. The southern state began shifting its tax collections from product retail value toward alcohol content, compressing the total number of pricing bands. The revision squeezed manufacturer realizations and stalled distribution volumes across lower-priced labels.

    Premium Labels Cover the Margin Gap

    Higher-margin spirits filled the gap created by the mass-market pullback. The Prestige and Above portfolio advanced 6.3 per cent in net sales value in the second quarter, aided by flavoured Smirnoff line extensions, the market relaunch of J&B Scotch, and broader gains in its luxury portfolio.

    The shift insulates Diageo from local excise volatility in low-margin categories. Premium spirits buyers absorb periodic tax increases far better than daily-wage or price-conscious consumers, allowing the company to defend total top-line numbers even when provincial tax boards target cheaper bottles.

    Distillers Diverge on Mass Brands

    State-level alcohol policy in India forces beverage manufacturers to pick a lane. Distillers with heavy mass-market footprints must either accept lower factory-gate realisations when local governments protect domestic producers or abandon low-margin distribution entirely. Several domestic rivals continue to chase mass volume through localized bottling units, but the economics look increasingly precarious under content-based excise systems.

    United Spirits has steadily reallocated capital toward upper-tier bottles, leaving low-margin labels exposed to state tax shifts. Distributors and liquor store operators now face a clear split: thin margins on commoditised local booze or higher ring sizes on imported and premium Indian-made bottles.

    Exports and Local Regulations Cool First-Half Momentum

    Prestige and Above net sales value grew 7.8 per cent over the full first half of financial year 2027. That performance lifted company-wide half-year net sales value by 4.2 per cent to Rs 5,961 crore.

    Management reported that stronger demand for local innovations was partially curbed by regulatory barriers in Maharashtra and logistics friction within export operations. Total volumes would have tracked higher without the supply interruptions overseas.

  • Malaysian Coffee Shops Seek Beer Tax Cuts as F&B Sales Drop 4.6%

    Malaysian Coffee Shops Seek Beer Tax Cuts as F&B Sales Drop 4.6%

    Malaysian coffee shop operators want tax cuts and phased wage adjustments in the upcoming Budget 2027. The demand follows a 4.6 per cent sales drop across cafes and restaurants.

    The Malaysia Singapore Coffee Shop Proprietors’ General Association wants the Ministry of Finance to lower the Sales and Service Tax on alcohol from 8 per cent to 6 per cent. That matches the rate applied to food and non-alcoholic drinks. The group is also urging officials to roll back the beer excise duty increase imposed in the prior budget cycle.

    Licensed food and beverage venues rely on beer sales to subsidise fixed overheads like wages, power, and property leases. Retail Group Malaysia recorded a 4.6 per cent year-on-year sales drop in the first quarter of 2026. It was the first quarterly downturn for the country’s restaurant and cafe sector in nearly three years.

    Operating Costs Outpace F&B Revenue

    Margins are tightening as higher rents and inventory costs hit businesses already suffering from lower footfall. In commercial hubs like Petaling Jaya, monthly retail shop rents jumped from RM6,000 in 2024 to RM12,000 on lease renewals. Keu Kok Meng, Vice President of the Association and Honorary Secretary of the Petaling Jaya Coffeeshop Association, shared the figures.

    Industry cost breakdowns show overheads outpace revenue across high-cost venues. William Lee, owner of Yilo Group and President of Persatuan Pemilik Restoran dan Bistro Malaysia, calculated that goods sold take 40 per cent of gross revenue. Staff costs consume 20 per cent, and rent takes 15 per cent. Utilities, promotional spending, and licensing take another 10 per cent each. Those figures push baseline operating costs to 105 per cent of income before tax.

    Illicit Trade Pressures Regulated Outlets

    Cheaper contraband beer is siphoning trade away from licensed outlets. Smuggled, untaxed stock sells at discounts of up to 50 per cent against legitimate supply. That pricing gap lures customers away from traditional street-corner operators that comply with local licensing and tax rules.

    Local eateries remain tied to the wider brewing supply chain. Data from the Confederation of Malaysian Brewers Berhad 2025 Economic Impact Assessment shows the domestic industry generates an annual average of RM3.3 billion in tax revenue. It also supports roughly 52,400 jobs across production, logistics, and retail hospitality.

    Policy Demands for Budget 2027

    Beyond alcohol taxes, trade groups are pushing back on blanket wage mandates. The association wants future statutory wage increases phased in with adjustments for regional living costs and local trading capacity. Members argue flat national hikes would force small operators to cut staff or shorten business hours.

    Family-run eateries have minimal cash reserves and struggle to pass cost increases to consumers cutting back on dining out. Previous cost shocks after post-pandemic reopenings left neighbourhood outlets with almost no retained earnings to absorb another hit.

    The Timeline for Fiscal Decisions

    Finance ministry officials are currently finalizing allocations and tax measures ahead of the national budget presentation. Coffee shop trade groups are lodging formal memoranda with state and federal ministries to secure excise freezes before the fiscal framework is locked in.

    Parliament will debate the budget measures in October, when lawmakers decide whether to freeze alcohol excise rates and adjust the service tax threshold for licensed food service providers.