India: United Breweries cuts production by 90% in Andhra Pradesh

United Breweries (UB), largest brewer in India and producer of the well-known Kingfisher beer brand, has cut down more than 90% of its production at its Bantupalli plant since the Excise Department of the State Government of Andhra Pradesh has taken over running of the nearly 3.500 liquor shops (reduced from formerly 4,380) across the State and stopped the saleof several popular beer and liquor brands. Additionally, the State has increased excise tax in two steps in October and December by INR 20 (USD 0.28) for 330ml of beer and has reduced the number of licensed bars from the current 798 as of January 1.

Andhra Pradesh Chief Minister YS Jagan Mohan Reddygradually bans the sales of alcohol. According to his plans, the state with its more than 50 million inhabitants will be liquor-free by 2024, well in time for the next legislative assembly election. In this respect Andhra Pradesh will follow four of the 28 other Indian states – Gujarat, Mizoram, Bihar and Nagaland – which have already implemented a strict prohibition.

The new law in the tenth-most populous state in India has already forced UB to lay off 600 employees and if all goes to plan, UB will need to totally close its brewery in Andhra Pradesh in the near future.

However, the increased ban on alcohol has caused new problems to Andhra Pradesh and its Chief Minister.  Revenue from excise tax has been significantly reduced in the last year and the traditionally strong tourism industry is already grunting and groaning. Consumers looking for affordable drinks commute to the neighboring state of Telangana, where liquor is cheap and plentiful.

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