United Spirits posted a 22.7 per cent drop in net sales value for its popular liquor segment to Rs 181 crore during the second quarter of FY2027.
The Diageo-owned alco-bev giant reported the decline on Wednesday, attributing the drop to increased taxes on non-local brands in Maharashtra and excise duty changes in Karnataka.
Overall net sales value across the company nonetheless climbed 2.8 per cent to Rs 3,258 crore for the quarter, bolstered by growth in its premium and luxury liquor portfolios.
Maharashtra created a regulatory split by establishing a preferential framework for Maharashtra Made Liquor. The state instituted a separate category for locally produced spirits with lower duty rates, while hiking excise duties on standard Indian-made foreign liquor. The tax gap handed domestic distillers an immediate retail edge across neighborhood bottle shops.
Karnataka simultaneously overhauled its excise slabs. The southern state began shifting its tax collections from product retail value toward alcohol content, compressing the total number of pricing bands. The revision squeezed manufacturer realizations and stalled distribution volumes across lower-priced labels.
Higher-margin spirits filled the gap created by the mass-market pullback. The Prestige and Above portfolio advanced 6.3 per cent in net sales value in the second quarter, aided by flavoured Smirnoff line extensions, the market relaunch of J&B Scotch, and broader gains in its luxury portfolio.
The shift insulates Diageo from local excise volatility in low-margin categories. Premium spirits buyers absorb periodic tax increases far better than daily-wage or price-conscious consumers, allowing the company to defend total top-line numbers even when provincial tax boards target cheaper bottles.
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