Kerala’s ‘fat tax’ could shrink meat sales in India

By Raghavendra Verma

- Last updated on GMT

Meat processors in Kerala hope demand for curry offsets any damage from the state's fat tax
Meat processors in Kerala hope demand for curry offsets any damage from the state's fat tax

Related tags: India, Lamb, Pork, Poultry

Meat sales in the southern Indian state of Kerala are expected to fall after the imposition of a 14.5% ‘fat tax’ on western-style fast-food items.

“[In terms of] the tax on food products, which are prepared and sold in branded restaurants – like burgers, pizza, tacos, doughnuts sandwiches, burger-patties, pasta and bread fillings and other items – an extra tax of 14.5% will be added as a fat tax,” said T M Thomas Isaac, Kerala’s communist finance minister in his budget speech in the state assembly on 8 July.

This sudden move by the newly elected leftist coalition government has left many restaurant chain owners dismayed. Giresh Mathai, owner of ‘Favourite Pizza’ in Kottayam told GlobalMeatNews: “We are worried as our [sales] volume will go down. If people used to have pizza once a week, they might change to once in a month.​”

According to Mathai, unlike in north India, 90% of all pizzas and burgers sold in Kerala contain meat. “Our cheapest pizza costs US$5 and meat constitutes about 30% of the cost,​” he said.

Chicken, beef and pork are the most popular toppings used at Favourite Pizza stores, said Mathai.

Focus on curry

Meat processors in Kerala are hoping to mitigate the setback from the new tax by relying on the market for curries, which still account for 80% of their sales. “Only 20% of our products are used in pizzas, burgers, sausages, pickles and dried meat,​” Saji Eassow, managing director of the state government-owned, Meat Products of India (MPI) told GlobalMeatNews.

MPI caters to local meat consumers through its chain of 350 dealers, and its sales are rising fast, said Eassow. “Five years ago we were selling just 30 tonnes of meat in 44 forms of value-added products and last year our sales were 83 tonnes,​” he said.

According to Eassow, pork-oriented products are most popular in Kerala and the company sells 1kg packs of its ‘meat and spice’ preparation for US$5. This pack is big enough to make 10 burgers cutlets, he said.

Unlike most of India, Kerala’s 33 million population is largely non-vegetarian, which offers a concentrated meat market, according to P Krishna Prasad, chairman of retailer Malabar Meat, in Wayanad. The annual sale of meat and meat products in the state are worth more than US$1.8bn and 90% to 95% of this is in traditional non-frozen channels, he told GlobalMeatNews.

The biggest challenge for meat processors in Kerala, said Prasad, is to make frozen meat more popular. “It is changing, but slowly,​” he said.

Kerala has a reputation for religious tolerance: 54.7% of its residents are Hindus, 26.6% are Muslims and 18.4% Christians.

Related topics: Policy, Industry growth, Meat, South Asia

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