Keralam's 908 bars do spirited business, but market share lacks fizz

Thiruvananthapuram: Keralam's bar sector has emerged as a major business, with the 908 establishments currently operating in the state representing an estimated capital investment of around ₹25,000 crore. The government earns ₹317.80 crore annually in licence fees from these bars, in addition to approximately ₹400 crore through turnover tax alone.

Each bar currently pays an annual licence fee of ₹35 lakh, which has to be renewed every year. The government's revenue from the sector also includes other taxes.

However, despite the growing number of establishments, bars account for only 12.25 per cent of the total foreign liquor sales in the state. Their market share has, in fact, declined from 13 per cent in 2023-24, when Keralam had fewer than 700 bars.

The decline suggests that the expansion in the number of bars has not translated into a corresponding increase in their share of liquor sales. Bar owners argue that allowing more establishments would not necessarily benefit the sector, particularly amid rising operational costs, including employee salaries. Several bars have also shut down during this period.

The state's current 908 bars include 57 five-star, 308 four-star, 512 three-star and 26 heritage establishments.
The sector underwent a major change following the liquor policy introduced by the Oommen Chandy government, under which several bars were converted into beer parlours. Around 500 of these establishments have since secured bar licences again, while approximately 100 are yet to do so.

Of the remaining establishments, around half have opted to continue operating as beer parlours rather than obtain the required hotel classification. The high cost involved in securing the classification has reportedly discouraged them from applying for bar licences.