Karnataka revises liquor prices. What does it mean and why your beer might get cheaper

On May 11, the state excise department of Karnataka rolled out a new structure for the excise duty on alcohol. According to this regime, duty will now be levied on the alcohol in beverage (AIB), across all categories of spirit. So, drinks with higher alcohol content will become costlier, in a bid for customers to opt for lower alcohol beverages. Karnataka is the first state in the country to tax on the basis of alcohol content. The structure was announced by Chief Minister Siddaramaiah in the 2026-27 budget. What does this mean for the consumer? We speak to experts to break it down.

What is the new tax structure?

The social cost of alcohol consumption is the reason behind the new regime. Be it domestic violence or health reasons, the government wants to nudge citizens towards drinks that have lower alcohol content. Vinod Giri, the director general of the Brewers Association of India, says, “The structure has changed on the principle of what the government is calling ‘alcohol-in-beverage’ taxation. All alcoholic products are made of alcohol as well as water. Some have more water, some have less water. If the taxes are based on value or volume, in effect you are taxing the alcohol as well as the water. The global standard in taxation is that the product we tax is the alcohol and not the water.”

He further explains the social motives behind it, “There is a WHO advisory, that the taxation on alcohol should be ‘harm proportionate’. Meaning the stronger the drink, the more the tax. The Karnataka government has decided that the tax will be based on the alcohol on the product. The excise duty will be linked to the millilitres of alcohol in the product.”

Beer to get cheaper

A release by United Breweries Limited (UBL), which is part of the Heineken Company says, “This move will make popular brands such as Kingfisher Premium, Kingfisher Ultra, Heineken more affordable to consumers across the state.” For example, a 650 ml bottle of Kingfisher Ultra was earlier priced at ₹225, will now be priced at ₹150. Heineken Original and Silver bottles will now cost ₹200 from the earlier ₹270. A spokesperson from UBL tells The Hindu, “Driving category growth and making our brands affordable for the consumers is important to us. The rollout on the revised pricing has already commenced and the consumer response has been encouraging.”

However, that is not the case for all spirits, especially high alcohol volume ones. Old Monk Very Old Vatted Special XXX Rum for example, was priced at ₹765 for 750 ml, and will now be ₹850. At Tonique on MG Road, the new prices are already in effect. Even though some old stocks are still there with the printed price reflecting the old MRP, the customers will be charged the new price.

Will prices in bars and restaurants go down?

“Yes, customers can expect some bars and restaurants to reduce prices on select drinks and alcohol menus,” says Pranav Tapaswi, senior general manager, at Jango Cafe and Cocktail in Sahakarnagar. “Places with digital menus can update pricing more quickly and easily, so changes may happen faster there. Overall, the reduction may not be dramatic, but customers could see slightly better pricing or more value-driven offers going forward.” However, he also adds while it gives some breathing room on procurement costs, the benefit for restaurants is not a lot. “While the prices for liquor may have come down, there has been significant increase in LPG and fuel prices that has impacted the overall profitability of the F&B businesses.”

What about breweries and craft beer?

Shankar Subramaniam, co-founder at from Mannheim Craft Brewery explains, “The new AIB excise policy are primarily for bottled and can beers and spirits. It does not apply to draught beer segment.”

He, on the other hand, is not so sure about menu prices going down for the customer. “That is a call that each restaurant and bar will have to take. Because in premium taprooms, bars and restaurants, spirits sales contribute to roughly 20% to 25%, the rest comes from our brewed beer and food. Food costs have increased significantly, and LPG crisis has further impacted us adversely. The cost of imported malts and for making craft beers have gone up also due to increase in cost of forex. Bars like ours also have high overhead cost, so, I do not think we can expect a change in the price of spirits. But since the policy is new, we will have to see how the costing works and we will take a judicious call.”

Vinod Giri lauds the move. “It requires a lot of courage for the government to make this move. Alcohol taxation is a sensitive matter in India, not only because of the socio-cultural reasons, but also the state’s revenue depends on alcohol. States are usually very risk averse; they do not want to experiment on taxes. For them to take a sweeping change requires conviction. This is the way alcohol is taxed all over the world. They have adopted the global taxation principles, despite their dependence on this revenue. It is quite commendable.”