Carlsberg will most likely close its new $25 million brewery in the Indian state of Bihar only three years after the inauguration. The reason is an alcohol ban which was imposed as part of an election promise by Nitish Kumar, Chief Minister of Bihar from 2005 until 2014 and again from 2015 on. Late last year, the state government decided to cut the number of shops selling alcohol by more than 80% and earlier this year decided to prohibit all liquor sales. "It was a sizeable market and investment but they decided to do prohibition in 12 hours," Carlsberg India Chief Executive Officer Michael Jensen blamed Kumar and his ruling Janata Dal party.
The ban does not only affect Carlsberg but also Diageo Plc, United Breweries and Molson Coors that have been running more than 70 distilleries and breweries for many years. Bihar, India's third-largest state with a population of more than 100 million of which 83 per cent are Hindus and 17% Muslims, is a preferred location of breweries due to cheap labor and the abundance of raw materials like barley and wheat.
Since the ban took effect, the number of liquor shops in neighboring state of Uttar Pradesh has increased as people seek to buy alcohol outside the state. For this reason Bihar’s Chief Minister is now urging Uttar Pradesh to follow his state’s footsteps in banning liquor. He is backed by a growing tendency among State governments to ban liquor in the apparent interest of protecting the public health.