Gurgaon tipple times are set to be shaken, but not the way your inner Bond would appreciate. Earlier this month the Haryana government unveiled its new excise policy for 2017-18, announcing a 20 percent hike in alcohol prices, starting April 1. Apart from the increase in the minimum retail prices across board, the VAT is also set to escalate to 14 percent for IMFL, 13.5 percent for beer, and 10-13 percent for country liquor. We get talking with industry insiders to find out the impact of increased prices on their business as well as the consumers.
“Right now the taxation for F&B is so heavy, it significantly impacts the revenue & profitability of the entire industry,” says Arjun Sagar Gupta, owner, The Piano Man. On being asked how this change is set to affect business, the DSSC Power Packer says, “Even though the net profit per product stays the same, it affects the total revenue as we’ll be selling less. Say, if people used to come for 3-4 drinks, now they’ll have 2-3 of those at home and come to us for only one drink.” Though the restaurateurs will try their best to not pass on the cost hike to consumers, it seems unavoidable, “The prices are increased only to incorporate taxation, it serves the government coffers & not the restaurant’s profits,” he quips. The Piano Man, currently only in Delhi, looks to set shop in Gurgaon by the end of this year.
Sharing his viewpoint is another Power Packer, Randeep Bajaj, owner, Town Hall, who says a policy change leaves restaurant owners no choice but to adjust prices accordingly. “It does affect how frequently you go out & what kind of places you visit, because pricing influences everybody and 20 percent is a big jump,” he points out. The inflation of costs is not limited to taxes alone, the annual license fee for bars & pubs has also been increased. Such establishments will now have to pay Rs 15 lakh as fee, as opposed to Rs 12 lakh previously. “The change in license fee comes at an additional Rs 25,000/month, which won’t be a major dent in the business. It is the increase in taxes which will be detrimental to F&B establishments,” Randeep says.
While the industry insiders & patrons look at a turn in their tipple times, there is a positive spike to the new policy – it should help the sector speed-up progress. As Haryana’s Finance, Excise & Taxation Minister, Captain Abhimanyu told Indian Express, “Due to the new policy, the revenue of the department would increase by 12 to 15 percent. We are expecting an additional Rs 500 crore revenue in addition to Rs 4,900 crore that was our target for the year 2016-17.”
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With the latest Town Hall outing in Gurgaon yet to attain its liquor license, we ask him how he seeks to balance a thriving business with the new excise policy, “I’d planned to execute aggressive pricing but now we probably won’t do it, it’ll be a more conservative approach to pricing,” he shares. On the same note Arjun says that bringing a unique product to the market helps him ensure business, “The Piano Man is a niche space for food+entertainment, people who want to consume our product will continue coming for the whole package – from that perspective we’re on the safer side.” He adds, “The atmosphere, music, and overall experience we offer continue to attract patrons regardless of the policy change.”
While that holds true, the gents do hope for the F&B industry to be less burned with taxes in the coming years. “More than generating revenue for the government, this change seems like moral regulation. Alcohol is considered a ‘wrong’, hence it is attacked, but we need to realise that more free the market, less criminalised is the product. It’s been proven time and again that stringent regulation of any commodity always backfires,” Arjun opines. He further adds that as the food industry began developing only in the last 10 years, heavy taxes is akin to shooting the industry in the foot while it’s trying to grow. Mirroring the outlook, Randeep signs off saying, “As a nation we should have a forward looking approach and regulate industries in a black & white manner. The authorities should create same pricing for the same product across the entire country.”
Featured Image Courtesy: thedrinkbusiness.com
