Sale of imported liquor like wine, champagne and whisky has come down by 70 per cent in Delhi after their prices went up sharply due to an increase in local levies by the Delhi government.
The Delhi government raised taxes on imported liquor in June. It fixed the sales tax on imported liquor priced above Rs 2,000 a bottle at 30 per cent, while those priced below began to attract 20 per cent.
Earlier, the local tax on imported whisky, wines and beer was a flat Rs 300, Rs 150 and Rs 30 per bottle, respectively. The Delhi government earns Rs 1,100 crore in excise revenue from liquor sales every year.
| PRICES ON A HIGH, SALES ON A LOW | ||
| Brand | Old price | New price |
| Jim Beam Bourbon Black | 2,200 | 2,540 |
| Dom Perignon Champagne | 11,800 | 14,210 |
| Remy Martin Cognac | 4,540 | 5,348 |
| Asahi beer | 120 | 126 |
| Figures in Rs | ||
“There has been an absolute showdown in the offtake of imported liquor since June. Demand is down by as much as 70 per cent and more people are turning to the grey market to source it cheaper. Instead of bringing in more revenues, the new taxation will bring less. We have had a dialogue with the Delhi government and it is looking into the matter,” said Amrit Kiran Singh, chairman of International Wine and Spirits Association of India.
The higher tax has increased the gap between prices at licensed outlets and the grey market. A 750 ml bottle of Johny Walker, for instance, is sold in the grey market for Rs 1,700, while the price at legitimate retail outlets is Rs 3,000. Singh said the move did not even help Indian brands because “there is no clash between imported and local liquor since they are at different price points”.
Rajiv Singhal, director of the Office of Champagne in India, which helps in creating a market for the bubbly, said there had been negligible business since the duty structure was changed. “Either people have cut down consumption or they have stopped buying as these are difficult times. Champagne has taken a hit. The imported wine business is not going to flourish anymore in Delhi,” he said, pointing out that a similar duty structure was imposed by Mumbai last year, but withdrawn this year.
Restaurants have not so far passed it on to consumers. “As this is off-season, we would like to absorb the price increase and pass it on only if it there is a pressing need,” said Deepak Sharma, secretary-general, Federation of Hotels & Restaurants Association of India.