Karnataka’s excise revenue rose 13.4% to ₹22,191.63 crore between April and September 2026, while per capita alcohol consumption fell 2.4%. Beer and wine gained a larger share of the state’s liquor market following the new tax policy.
Karnataka has recorded a significant increase in revenue from liquor sales, with the state government’s excise collections rising by 13.4% during the first six months of the 2026-27 financial year. However, despite the growth in revenue and an increase in the overall volume of liquor sales, the average per capita consumption of pure alcohol has declined. Data from the Brewers Association of India (BAI) shows that per capita pure alcohol consumption fell by 2.4% between May and September 2026 compared to the corresponding period last year.
These contrasting trends have drawn attention to changing consumer preferences following the introduction of the state’s new Alcohol in Beverage (AIB) tax policy, which links taxation to the alcohol content of beverages.
Karnataka Records 2.4% Decline In Per Capita Alcohol Consumption
According to data provided by the Brewers Association of India, Karnataka’s per capita consumption of pure alcohol declined to 1.59 litres between May and September 2026. During the corresponding period last year, the figure stood at 1.63 litres, marking a decrease of 2.4%.
The decline points to a change in the average quantity of pure alcohol consumed, even as the overall volume of liquor sales has increased. Industry representatives have partly attributed this trend to changing consumer preferences following the introduction of the new liquor tax policy.
New Alcohol In Beverage Tax Policy Influences Consumer Choices
One of the key factors behind the changing consumption pattern is the new Alcohol in Beverage (AIB) tax policy introduced by the Karnataka government. The policy came into effect on May 11, 2026, introducing a taxation structure based on the alcohol content of beverages.
According to the Brewers Association of India, the policy has encouraged consumers to shift towards beverages with lower alcohol content. Since taxation is linked to the amount of alcohol in a drink, the revised structure has also influenced manufacturers’ product strategies and pricing decisions.
Karnataka Excise Revenue Increases By 13.4%
Despite the decline in per capita pure alcohol consumption, Karnataka has recorded a substantial increase in excise revenue. The state government’s excise collections reached ₹22,191.63 crore between April and September 2026, representing a 13.4% increase compared to the corresponding period last year.
The increase highlights the continued contribution of liquor sales to the state’s revenue. Excise collections have risen even as the average quantity of pure alcohol consumed per person has declined.
Overall Liquor Sales Volume Rises By 16%
While per capita pure alcohol consumption has decreased, the total volume of liquor sales in Karnataka has increased by 16%. This suggests that the decline in average pure alcohol consumption does not necessarily indicate a fall in the overall volume of alcoholic beverages sold.
Another notable development is the changing composition of liquor sales. The combined share of beer and wine in the state’s liquor market has increased from 36% to 45%, pointing to a shift in consumer preferences.
Beer And Wine Gain A Larger Share Of Karnataka’s Liquor Market
The share of beer and wine sales has risen from 36% to 45%. These beverages generally have a lower alcohol content than many spirits, and their growing share could be one of the factors contributing to the decline in average per capita pure alcohol consumption.
The trend also reflects a change in the composition of Karnataka’s liquor market following the implementation of the AIB tax policy. However, the available figures do not establish that the policy alone is responsible for the shift in consumer preferences.
IMFL Manufacturers Reduce Alcohol Content
The new taxation structure has also influenced the products offered by liquor manufacturers. Some manufacturers of lower-priced Indian-Made Foreign Liquor (IMFL) have reduced the alcohol content in their products from 42.8% to 40%.
According to the Brewers Association of India, the average alcohol content of IMFL sold in Karnataka has declined to 40.5%. This reduction is consistent with the broader shift towards beverages with lower alcohol content in the state.
Karnataka’s Liquor Market Records Contrasting Trends
Karnataka’s liquor market has recorded contrasting developments in 2026. While the government’s excise revenue has increased by 13.4% and the total volume of liquor sales has grown by 16%, per capita pure alcohol consumption has declined by 2.4%.
The growing share of beer and wine, along with the reduction in alcohol content in some IMFL products, points to changes in the composition of liquor sales. The impact of the AIB tax policy on consumer behaviour and the state’s excise revenue will remain an important aspect of Karnataka’s liquor market in the coming months.