Supply and demand: Booze supply runs short over duty standoff

Murree Brewery cut production by 75% cent after Punjab imposed 75% duty on raw alcohol.

LAHORE:

Pakistan’s biggest liquor producer has suspended three quarters of its production for the last four months in protest at the Punjab government’s imposition of a 75 per cent duty on raw alcohol, creating an acute shortage of alcoholic beverages in the local market.

The management of Murree Brewery says the new duty could force them to raise prices, which would make it harder for them to compete with other local manufacturers (the Quetta Distillery and Indus Distillery) as they are not based in Punjab and are not subject to the new duty. Alcohol sales traditionally go up during the winter.

Only 6 of 23 brands produced by Murree Brewery are currently available in the market. Production of the most popular beverages – London Dry Gin, Vat 1, and matured whiskeys up to 21 years old, accounting for 85 per cent of total sales – stands at 20 per cent of capacity, said brewery officials.

They said that not only was the company losing money, but the government too in the form of taxes.

He said that when alcohol prices went up, people didn’t stop drinking but turned to cheaper quaffs. A few days ago, 15 people died after drinking moonshine in Chunaisar Goth, Karachi.

Abdul Mannan, manager at the bar room in Lahore’s Ambassador Hotel, said that with locally produced alcohol in short supply, people were being forced to turn to cheaper substandard products or expensive brands smuggled into the country.

Excise and Taxation Director General Muhammad Anwar Rashid said that a legal challenge to the duty was about to be heard by a court so he could not comment on the matter.

Another department official, speaking on the condition of anonymity, said that the department would not back down. “Murree Brewery must respect the law and pay the tax without further delay. There is no room for dialogue on the issue,” he said, noting that the company had made record post-tax profits of over Rs500 million in the last financial year.

A Murree Brewery official hoped that the matter would be resolved through talks. “We are meeting with the management in a few days. We are losing revenue and the factory union is threatening a strike,” he said. “The management feels caught in a bad situation.”

Sindh has the largest number of non-Muslims and Murree Brewery sales are highest there.

The company used to send 80 trucks of liquor there every month. Now it is sending eight every month. The Sindh government has written to the Punjab government asking that the issue be settled.

Published in The Express Tribune, October 24^th, 2011.