Excise revenue surges despite consumption dip

By City Hilights13 November 2026 · 9:10 pm IST · 2 min read

BENGALURU: Karnataka has recorded a substantial surge in state excise revenue alongside a notable shift in consumer drinking patterns, marked by an increased preference for lower-alcohol beverages and a slight decline in overall per capita alcohol consumption, according to industry and official data.

Data released by the Brewers Association of India (BAI) indicates that the average per capita consumption of pure alcohol across the state dropped to 1.59 liters during the May-to-September period, representing a 2.4% decrease compared to 1.63 liters during the corresponding period last year. Industry analysts attribute this shift primarily to the state government’s new ‘Alcohol in Beverage’ (AIB) tax policy, implemented on May 11, which structures excise duties directly according to the alcohol content present in specific drinks. This tax framework has encouraged consumers to transition toward beverages with lower alcohol volumes.

Despite the reduction in pure alcohol consumption volume, the state government’s financial inflows from the sector have climbed significantly. Between April and September 2026, Karnataka’s cumulative excise revenue reached approximately ₹22,191.63 crore, reflecting a strong 13.4% year-on-year increase compared to previous fiscal figures.

Concurrently, overall retail sales volume across the state rose by 16%, driven heavily by a transition in market share. The combined market share of beer and wine sales climbed from 36% to 45%. Furthermore, several manufacturers of lower-priced Indian-Made Foreign Liquor (IMFL) adjusted their product formulations, reducing alcohol content from 42.8% to 40%. Consequently, the average alcohol content of IMFL sold across Karnataka has moderated to roughly 40.5%.

Changing consumption patterns

As the state government evaluates the impact of the AIB taxation framework, the structural shift toward beer, wine, and lower-strength IMFL demonstrates how policy changes can influence public drinking habits while maintaining strong fiscal inflows.