Maharashtra Cabinet Approves Up to 60% Alcohol Hike; United Spirit, Radiko, Allied Mixes Stocked under Pressure
Maharashtra’s cabinet approved a sharp increase in the consumption tax on alcohol, marking the biggest gain since 2011. The move is expected to significantly increase retail prices and could lead to a ripple effect in the alcoholic beverage industry.
According to the revised structure, the excise tax on foreign liquor made in India (IMFL) has been increased by 50% to 60%, while taxes on rural liquors have increased from rupee. 180 to Rs. 205 per liter. However, beer and wine are still unaffected, providing some stability in these categories.
The new excise tax structure will be launched in phases in the coming months.
In addition, new Maharashtra Manufacturing Wine (MML) has been introduced to facilitate local manufacturing.
Here is the way for the new price of wine brands:
| category | Old price | New price |
| Country wine | Rs 70.00 | Rs 80.00 |
| IMFL | rupee. 120–150 | Rupee 205.00 |
| High-quality foreign wine | rupee. 210–330 | 360.00 rupees |
| Maharashtra has a drink | not applicable | Rs 148.00 |
Market impact: Stocks respond differently
Brokerage Elara Securities expects IMFL retail prices to rise by 30% to 50%, which could reach sales, especially in the premium and luxury sectors. Given their income to Maharashtra, United Spirits Ltd (USL) and Radico Khaitan are expected to be the most affected.
However, companies focusing on country liquor and beer/wine are expected to benefit from favorable pricing dynamics.
Here is a summary of how liquor stocks performed over the past year:
What does this mean for the industry
1) Negative prospects:
USL may see earnings per share drop by 6% to 8% due to its 20% to 22% in the Maharashtra market. Radico Khaitan could suffer from 2% to 3% of EP hits, with 7% to 8% coming from the state. The large number of Allied mixers in the IMFL segment are also at risk.
2) Positive prospects:
Players of GM Brewery, SOM Brewery and other country wines may increase from profit margins. United Brewery and Sura Vineyards may benefit from stable prices of beer and wine.
Policy shifts have long-term impact
The launch of the Maharashtra manufacturing category is designed to promote local manufacturing, which can reshape the competitive dynamics of the industry. Experts believe that this move, coupled with tax rate hikes, could lead to a strategic restructuring of product pricing, regional branding and volume growth.
