Budget 2014: Coffee shops likely to charge at least $1 more per beer bottle

The 25 per cent increase on alcohol tax is the heftiest of the hikes on "sin taxes", with tobacco levies up by 10 per cent and betting duty rates up from 25 per cent to 30 per cent.
The 25 per cent increase on alcohol tax is the heftiest of the hikes on "sin taxes", with tobacco levies up by 10 per cent and betting duty rates up from 25 per cent to 30 per cent.ST PHOTO: SEAH KWANG PENG

It is going to cost more to have a beer in Singapore, with heartland coffee shops set to charge at least a dollar more per bottle after the hike in liquor tax announced during last Friday's Budget.

Coffee shop owners cannot afford to absorb any rise in cost price, said the chairmen of two associations representing over 700 shops.

A bottle of beer that costs around $6 could go up to over $7, said Mr Thomas Foo, chairman of Kheng Keow Coffee Merchants Restaurant and Bar-Owners Association.

Mr Hong Poh Hin, chairman of Foochow Coffee Restaurant and Bar Merchants Association, said: "We haven't spoken to our suppliers yet, but we will definitely pass any increase on to consumers."

The 25 per cent increase on alcohol tax is the heftiest of the hikes on "sin taxes", with tobacco levies up by 10 per cent and betting duty rates up from 25 per cent to 30 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".

Higher-end establishments are waiting to negotiate with suppliers before deciding what to do.

At the Timbre Group, which runs several live-music restaurants and bars, managing director Edward Chia said raising prices will be the last resort. Aside from negotiating with his suppliers, his bartenders will come up with new cocktails that use less alcohol.

"Unlike beer, the concentration of alcohol in cocktails is something we can control," he said.

Singapore's beer prices are already known to be among the highest in Asia. Higher prices will have an impact on tourists, said Mr Chia, whose company is behind the Beerfest Asia festival.

The president of the Singapore Nightlife Business Association, Mr Dennis Foo, said the tax hike pushes up the cost price of a shot of spirit, such as whisky or vodka, by 60 cents. So consumers can expect bars to charge $1 more per shot if they do not absorb the increase.

Mr Foo, the chief executive of St James Holdings, which manages several clubs, said the tax hike appeared to be targeted at drinkers who buy cheap alcohol.

Hotelier-restaurateur Loh Lik Peng described the tax hike as "a steep rise in one hit". "We will have to strike a balance between what we absorb and pass on. Everyone down the chain will take a small hit in profit margins."

Addictions specialist Munidasa Winslow said costlier drinks may deter young people with less disposable income and binge drinkers. "But if you're already a heavy drinker, it won't make much difference," he said, adding that higher prices may drive some to cheaper options.

Property agent Nicolle Lim, 25, who spends between $100 and $130 at least once a week on drinks at bars or clubs, said she will choose to drink less if prices go up.

"Drinks are already expensive here. A $1 increase is quite significant."

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