Worried Odisha govt hints at offer price hike on beer

Odisha Sun Times Bureau
Bhubaneswar, May 5:

The Odisha government is waiting for the outcome of a hearing in the High Court scheduled for tomorrow in a case filed by five beer manufacturing companies challenging the government’s direction to reduce the offer price of beer by 20%.

While the Excise department is willing to reduce the offer price to 10% instead of the 20% it had sought in accordance with the 2015-16 Excise policy, the dispute remains unresolved as beer makers have demanded it in writing.

The Excise minister has revealed that if required the government may make changes in the Excise policy.

“We offered to reduce the offer price from 20% to 10%. But they want it in writing, which we cannot give. We will make alternate arrangements after going through the High Court’s decision at tomorrow’s hearing. If it’s required, some changes will be made. What’s new in it?” queried Excise Minister Damodar Rout.

While the deadlock between the Odisha government and beer manufacturers continues over the issue of offer price, there is acute shortage of the frothy beverage in the market, depriving tipplers of their favorite brew this summer.

The Odisha State Beverages Corporation (OSBC), the state-run wholesale distributor of beer and Indian Made Foreign Liquor (IMFL) in the state, has failed to supply even 19% of the cases supplied to retailers in April last year.

According to available information, OSBC had supplied 12.49 lakh cases of beer to licensed retailers in the state during the month of April last year. During the same period this year, the OSBC has been able to supply only 2.35 lakh cases. Similarly, the corporation had done a meagre business of Rs 11.93 crore compared to Rs 37.41 crore during April last year.

To add to the worries of the state government, licensed liquor retailers of the state, who met OSBC authorities yesterday, told them point-blank that unless sufficient quantities of beer is supplied as per requirement, they will be forced to shut down their retail counters.

The retailers’ delegation which met the OSBC managing director yesterday told him that while the corporation is unable to meet the supply, they have to pay the license fee. Demanding that OSBC should compensate them for their losses, they said they would have no option but to shut down their outlets if supplies are not normalized soon.

The new excise policy provides for procurement of top beer brands at 20% less. Opposing the new excise policy of the state government, five major beer manufacturing companies – SABMiller India, Carlsberg India, United Breweries (UB), MP Beer Products and Devans Breweries – have stopped supplies to the OSBC and have not entered into agreement with it for supplying beer. The five manufacturers who refused to sign the agreement, it may be noted, control 80% of the beer market in the state.

Offer price is the rate at which they supply the beverage to OSBC.

The government has served show-cause notices to the five beer makers threatening cancellation of their label registration and has asked district collectors of Jagatsingpur and Khurda to cancel brewery licences of SABMIller and UB, which have plants in the two districts.

The state has stopped receiving stocks from the companies at old prices, resulting in short supply and price rise by 30 to 50%.

It may be mentioned here that talks between the beer manufacturers with the development commissioner and the Excise commissioner for a resolution of the impasse had failed.