Karnataka Budget 2024: Impact on Brewery Stocks and Liquor Market
The recent Karnataka Budget 2024 has drawn attention to brewery stocks following the government’s decision to raise excise duty on alcohol, particularly beer. This move is expected to have significant implications for liquor sales in the state and is likely to affect leading liquor brands.
Karnataka Budget Proposal:
The Karnataka government has proposed an increase in excise duty on alcohol for the second time within a year, with a focus on beer and Indian-made foreign liquor (IMFL). This decision has put the spotlight on major liquor companies such as United Breweries, United Spirits, Radico Khaitan, and Globus Spirits.
Expert Insights:
Market experts have weighed in on the potential impact of the Karnataka Budget 2024 proposal on brewery stocks and liquor sales. Avinash Gorakshkar, Head of Research at Profitmart Securities, highlighted the significance of the duty hike and its implications for liquor majors.
Impact on Brewery Stocks:
The proposed duty hike is expected to have a more significant impact on companies manufacturing and distributing beer compared to those focused on spirits. This marks the second instance of such a duty hike, with the government aiming for a substantial uptick in excise collection.
Market Dynamics:
Despite already higher liquor prices in Karnataka compared to other southern states, especially for beer, spirit brands with lower price tags remain relatively more affordable. The market predominantly consists of sales from the lowest and medium price brackets, indicating price sensitivity among buyers.
Market Reaction:
While the immediate impact of duty hikes on overall liquor sales may be temporary, long-term market trends are expected to remain stable. Recent data suggests sustained demand for beer despite price pressures, indicating the resilience of the liquor market.
Conclusion:
The Karnataka Budget 2024 proposal to raise excise duty on alcohol, particularly beer, has implications for brewery stocks and the liquor market in the state. While short-term challenges may arise, the long-term outlook for the industry remains stable, driven by sustained demand and customer preferences. Investors and stakeholders will closely monitor the market reaction to this development in the coming days.
