Bars reopen as Bevco slashes profit margin

The Kerala State Beverages Corporation (Bevco) has slashed its wholesale profit margin on liquor to break the deadlock in the hotel sector.

The State-owned liquor monopoly’s “arbitrary decision” to hike the profit margin on alcohol brands from 8% to 25% had prompted the closure of 730 bar hotels and 300-odd beer and wine parlours in the State on June 20.

The hotelier’s association had argued that the purchase rate of legal liquor was higher than the MRP. Hence, bars had to sell alcohol at a loss or risk prosecution. So they chose closure, further crippling a pandemic-ravaged sector that is also a significant employer.

HC ire

The shuttering of bars immediately caused long lines in front of Bevco outlets, drawing the ire of the High Court. The court said the crowding could trigger a third coronavirus wave.

Moreover, it was demeaning to customers to stand for hours in kilometre-long queues to purchase legal liquor. Their insulation from the pandemic was in jeopardy. The High Court had asked the government to respect consumers' dignity and mitigate crowding in front of liquor shops.

The court’s “stinging rebuke’ caused Excise Minister M.V. Govindan to summon a top-level meeting of Excise and Bevco officials.

He had earlier tasked a three-member committee to break the deadlock in the hospitality sector caused by Bevco’s decision.

The committee headed by Finance Secretary Sanjeev Kaushik, Excise (Taxes) Secretary Saurabh Jain and Taxes Secretary Biswanath Sinha suggested that Bevco reduce its profit margin on liquor sold to bars from 25% to 13%.

Extra counters

Excise Commissioner S. Anananthakrishnan has reportedly recommended extra counters at Bevco outlets where the daily sales exceed ₹10 lakh. Moreover, he has suggested that Bevco shift outlets to serviceable localities. Many State-run shops operate on dingy premises.

The government has also asked Bevco to deploy more staff at counters. It was also weighing whether to increase liquor store and bar timings once the COVID-19 surge abated.

Kerala has among the highest per capita consumption of liquor in the country. The State earns an estimated 12,000 crores or more annually in liquor tax.

Legal alcohol is also prohibitively priced in the State. A bottle of low-priced rum with a factory price of ₹60 cost the consumer ₹600 or more after the various taxes and Bevco profit margin kicked in.

Chief Secretary V.P. Joy has called a meeting of Excise officials to formulate a policy to protect the consumer rights of the large section of liquor buyers whose rights are often given a low priority.

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Printable version | Sep 21, 2021 3:06:21 AM |

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