United Breweries' share price: Shares of United Breweries slipped as much as 2.75 per cent to Rs 1,499 apiece on the BSE on Friday. The stock came under pressure after Zee Business reported that the Karnataka government has proposed in the state Budget to increase the existing rates of additional excise duty on Indian-made liquor (IML) by 20 per cent on all 18 slabs as per Annexure 1. It was also proposed to increase the additional excise duty on beer from 175 per cent to 185 per cent.

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"With this and effective enforcement and regulatory measures, the revenue collection target for the Excise Department for the year 2023–24 is fixed at Rs. 36,000 crore," the proposal added. These proposals will increase the price of liquor significantly.

"Even after the increase in excise rates, the price of liquor in our state would be lower when compared to the neighbouring states," Chief Minister Siddaramaiah said in the budget speech.

Other liquor stocks, too, were trading in the red. For instance, Radico Khaitan was down 2.67 per cent to Rs 1,347.30 on the BSE. GM Breweries, too, was down over 3 per cent at Rs 584 on the BSE, while Som Distilleries & Breweries was down 5 per cent, post-development.

Alcohol Market in India

As per Statistica, with the development of reasonably priced premium brands and changing consumer behaviour, particularly among the younger generation, the liquor sector in the Indian subcontinent has undergone rapid transformation. On the one hand, excessive alcohol consumption can lead to chronic health problems, while on the other, alcohol sales are a key source of revenue for most Indian states.

Alcoholic beverage types

The alcohol market in the country comprises mainly Indian-made Indian liquor (IMIL), Indian-made foreign liquor (IMFL), wine, beer, and imported alcohol. Heavy import duties and taxes make the latter minuscule players in the country’s alcohol market. Most alcoholic imports came from the United Kingdom and the United States. With a market volume of 34 billion U.S. dollars, spirits accounted for the largest segment in the alcoholic drinks market. The most widely consumed indigenous alcoholic beverage is called "Desi Daru". Molasses, a sugarcane by-product, is used to make it, the report adds.