Kopitiam, the biggest food chain operator in Singapore, has jacked up the price of a bottle of beer by $1.30 - three times what most coffee shops have opted for in the wake of the recent alcohol tax hike.
Since raising duty on liquor by 25 per cent last week, the Government has warned shops against profiteering. The extra tax means a bottle of beer should cost, at most, 40 cents more.
While most coffee shops here have kept any increase to between 40 cents and 60 cents, Kopitiam has pushed the price from $5.50 to $6.80 at its 80 outlets islandwide.
Managing director Alden Tan denied the chain was taking advantage of the new tax, which was raised for the first time in a decade.
Instead, he explained, the increase was based on a survey last weekend of more than five other coffee shops and food courts, which showed they were charging between $6.20 and $7.90. That puts Kopitiam's new price somewhere in between.
"If market and customers do not accept it, then we will change and adjust accordingly," said Mr Tan, adding that the new price is "not carved in stone".
He also believes the market will stabilise in a few weeks. "No one wants to price themselves out of the market anyway," he said,
Coffee shops with more moderate hikes said they were mostly adhering to new price lists given by suppliers.
Chang Cheng Mee Wah , which has 29 branches, raised the price of a bottle of beer by about 50 cents. Manager Yap Kim Leong said the increased prices will also pay for overheads such as higher salaries for cleaners and servers, which have risen by about $300 this year.
The Kim Leng San chain opted for a 60 cent increase at its 26 outlets.
A check with some 20 independent coffee shops and hawker centre drink stalls across the island also found that most had lifted prices by 30 cents to 60 cents.
At least one food court operator, however, is holding its hand.
Food Republic has not raised beer prices at its five food courts allowed to serve alcohol. Its VivoCity outlet is currently selling a bottle of Carlsberg for $6.50.
Meanwhile, beer wholesaler Lee Hong Kiat, who supplies to 400 coffee shops and drink stalls, said he has already seen a 20 per cent drop in demand.
The 25 per cent increase in alcohol tax was the heftiest of the hikes on "sin taxes" announced in the Budget last week. Tobacco levies went up by 10 per cent and betting duty by 5 per cent.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said the increases were "in line with our social objective of avoiding excessive consumption or indulgence in these areas".
It is a stance that Kim Leng San chairman Hoon Thing Leong supports. "If people buy less beer, fewer would get drunk and that minimises the trouble they might cause," he said.
One regular drinker, who wanted to be known only as Mr Chua B.K, said he has cut back on his after-work drinks at the coffee shop near his Bishan home.
"Its not that I can't afford to pay a few cents more, but is probably for the better that I drink less and stay home," he said.
Additional reporting by Laura Ng and Vanessa Chng
