State excise revenue rises 13.4 per cent to Rs 22,191.63 crore in April-September, while beer and wine increase their share of alcoholic beverage sales to 45 per cent
Karnataka’s per capita consumption of pure alcohol declined 2.4 per cent in the five months following the introduction of a taxation system linked to the alcohol content of beverages. The decline came even as the state recorded a 13.4 per cent increase in excise revenue during April-September 2026, indicating a shift towards lower-strength alcoholic drinks alongside higher government collections.
Per capita consumption of pure alcohol fell to 1.59 litres during May-September 2026, compared with 1.63 litres in the corresponding period last year, according to data analysed by the Brewers Association of India (BAI). During the same period, the overall volume of alcoholic beverages sold in the state increased by around 16 per cent, while the quantity of pure alcohol consumed declined.
Karnataka’s excise revenue rose 13.4 per cent year-on-year to Rs 22,191.63 crore in April-September, suggesting that the revised taxation framework has enabled the state to increase collections even as consumption patterns move towards beverages with lower alcohol content.
The state introduced the Alcohol-in-Beverage (AIB) taxation system on May 11, under which the tax payable is determined by the quantity of alcohol present in a beverage. The framework has influenced both consumer preferences and manufacturers’ product formulations, with the share of beer and wine in total alcoholic beverage sales rising to 45 per cent from 36 per cent a year earlier.
Manufacturers of economy-segment Indian-made foreign liquor (IMFL) have also lowered the alcohol strength of some products following the taxation changes. The average alcoholic strength of IMFL products sold in Karnataka has declined from 42.8 per cent to 40.5 per cent, according to BAI, with several manufacturers reducing the strength of their offerings to around 40 per cent.
Vinod Giri, director general of BAI, said the decline in per capita alcohol consumption was significant given the short period since the new tax structure came into effect. He noted that international experience showed consumption could fall rapidly when taxation was linked to alcohol content, but added that the pace of the reduction in Karnataka was particularly notable.
Despite the decline in alcohol consumption, sales volumes across categories have expanded. Total alcoholic beverage case sales increased 15.7 per cent during April-September, reversing an 8.4 per cent contraction in the corresponding period last year. IMFL case sales, meanwhile, grew 1.1 per cent, compared with a 1 per cent decline a year earlier.
According to the industry association, the increase in beverage volumes alongside a reduction in pure alcohol consumption reflects a shift towards drinks with lower alcohol strength rather than a corresponding decline in the quantity of beverages purchased. BAI said the development indicates that linking taxation to alcohol content could allow state governments to improve excise collections while encouraging manufacturers to reformulate products with lower alcohol levels.
