India’s Beer Sales Surge as States Squeeze Spirits with Higher Taxes

Beer sales in India jumped 17% in the April-June quarter as rising taxes on spirits widened the price gap between the two categories, industry data show.

The gains were sharpest in Maharashtra and Karnataka, where beer sales rose 42% and 35%, respectively, according to the Brewers Association of India. Spirits sales rose just 2% nationally, with whiskey sales down 1%.

Industry officials attributed the shift to state tax increases on Indian Made Foreign Liquor that were not matched by comparable hikes on beer, along with hot, dry weather that boosted demand.

The Brewers Association of India, which represents companies including United Breweries, AB InBev and Carlsberg, said the industry performed well in the quarter, which coincides with beer’s peak season.

“The first quarter of this fiscal, which is the peak season for beer, has been good for the industry. Beer sales have grown by over 17 percent nationally over the same period last year. July trends too are not different,” said Vinod Giri of the Brewers Association of India.

Regional gains concentrated in key markets

Growth was concentrated in several major consumption markets. Giri said beer sales rose 42% in Maharashtra and 35% in Karnataka.

Kartikeya Sharma, president of AB InBev India, said Maharashtra’s beer market took off after the state raised taxes on spirits. “Maharashtra grew about 40-45 percent last year, even year to date it’s growing 40 percent,” Sharma said.

Karnataka has since followed the same pattern, with beer sales up more than 50% over the past three months, according to Sharma.

He added that the strong growth isn’t confined to those two states: Telangana, after a sharp decline last year, is also growing this year, while West Bengal, Haryana and Uttar Pradesh have posted more modest gains.

Spirits sales diverge by category

The Brewers Association views excise policy as a key driver of beer’s growth, with Giri noting that several states have adopted tax policies that favor beer, encouraging consumers toward lower-alcohol drinks.

Tax adjustments across states have made spirits relatively more expensive than beer. Maharashtra, Karnataka, Odisha and West Bengal have all revised taxation on Indian Made Foreign Liquor (IMFL), while beer prices have not risen in step — and have even fallen in some markets.

Against this backdrop, excise data and officials cited by the report show India’s overall spirits sales rose just 2% year-on-year in the first fiscal quarter, with sharp divergence by category. Whisky, which accounts for roughly two-thirds of spirits sales, fell 1%, while brandy and vodka sales grew.

Amar Sinha, managing director of Allied Blenders, said overall demand remains weak, with no growth in Maharashtra’s IMFL market and Karnataka’s value segment also hit by price disparities.

Rising spirits taxes shift the price advantage to beer

Alcohol regulation and taxation in India are largely state matters, with each state operating a relatively independent pricing and tax system.

In the recent round of policy changes, several states raised tax burdens on IMFL without a corresponding increase for beer — in some markets, beer taxes even declined. This has shifted the relative pricing between the two categories and forms an important backdrop to beer’s growth.

Maharashtra is a clear example. In June 2025, the state revised its IMFL excise structure: for products with a manufacturing cost of up to 260 rupees per bulk liter, the excise duty rose to 450% of manufacturing cost or 750 rupees per proof litre, whichever is higher; for products above that cost threshold, the duty is levied at 300% of manufacturing cost. The 260-rupee figure marks a manufacturing-cost cutoff, not an excise ceiling.

This change fed through to retail prices. Reuters reported that Maharashtra raised tax rates on mass-market spirits brands from 300% to 450%, affecting brands including Diageo’s McDowell’s and Pernod Ricard’s Royal Stag. Industry sources said sales of the affected brands fell 35% to 40% in the weeks following the tax increase.

Beer, meanwhile, did not face a comparable tax hike. The Brewers Association has noted that Maharashtra raised spirits taxes by 50% in 2025 without raising beer taxes. This divergence in tax treatment between the two categories has further shifted relative retail pricing and created a more favorable competitive environment for beer.

Karnataka took a different reform approach. Starting May 11, 2026, the state implemented an Alcohol-in-Beverage (AIB) based excise system — the first state in India to adopt this model. The new system sorts alcohol products into eight tax slabs and eases uniform government control over pricing, allowing producers to set product tiers based on market conditions and alcohol content, among other factors.

Weather also boosting beer consumption

Beyond tax policy, seasonal factors have supported beer demand. The Brewers Association noted that the first fiscal quarter is beer’s peak season by nature, and that summer heat combined with below-normal monsoon rainfall further supported sales.

Brewers also pointed to unusually dry weather continuing into August as another factor sustaining beer consumption.

“So now we just need to hold on to this momentum and it could be one of the better single year industry growth that the category has seen in a very long time,” Sharma said.