Bhutan Scrambles to Contain Alcohol Hoarding as Prices Surge Before 2026 Tax Hike

Shortages and price spikes hit Bhutan as new alcohol taxes near

Alcohol that was easy to find in shops and bars across Bhutan is now scarce. Prices have climbed fast, and suspicions of hoarding are spreading as the country counts down to a significant shift in alcohol taxation on January 1, 2026. Popular beers such as Druk 11000 and Druk Lager, and spirits like Ter, Misty Peak, and Black Mountain Whisky 180 ml, are hard to find even though manufacturers say production and dispatches continue without interruption. The squeeze is being felt nationwide, from Thimphu to border towns, and across bar counters, karaoke lounges, and neighborhood groceries.

Factory prices have not changed, but retail tags have. A carton of canned beer that sold for about Nu 1,380 a month ago is now fetching between Nu 1,550 and Nu 1,750 in some areas, while the ex factory price hovers near Nu 1,350. A bottled lager once listed at Nu 70 is now going for Nu 85, and some restaurants are charging up to Nu 100 per can. The math has turned attractive for anyone with stock on hand. Even at Nu 85 per can, a 24 can carton can yield about Nu 690 more than the ex factory price, more than doubling the margin.

Shopkeepers say beer sells out within hours of delivery and restocking takes longer. Some report being out of stock for weeks despite placing large orders. Karaoke bars and restaurants are struggling to keep shelves filled, while dealers and middle agents are suspected of holding back inventory to resell at fatter margins after the new taxes kick in. Distributors deny hoarding, but customers are wary and have started visiting back rooms and storage areas to check. Wines from the Army Welfare Project have been reported out of stock at the factory. At the same time, Bhutan Brewery Private Limited continues to dispatch an estimated 300,000 cartons a month to about 50 direct dealers, which points to a bottleneck beyond the factory gates.

What changes in taxes are coming in 2026?

Bhutan is overhauling how it taxes alcohol and other harmful products. Starting January 1, 2026, alcohol will be subject to a 100 percent customs duty, a 5 percent Goods and Services Tax (GST), and an excise levy of Nu 1,200 per liter of pure alcohol. These changes replace the current 200 percent sales tax system. The new design raises the final price for many products and ties the excise directly to the amount of alcohol in each bottle or can.

Consider a standard 750 ml bottle of whisky at 42.8 percent alcohol by volume. A bottle that currently costs around Nu 325 is expected to land near Nu 643 under the new structure, assuming similar ex factory and distribution costs. For beer, a 500 ml can of Druk 11000 that has sold for around Nu 65 could move closer to Nu 90 once the full package of taxes is applied, again subject to later adjustments in distribution and retail costs.

The excise uses pure alcohol content as the base. This means the higher the strength, the higher the excise. Customs duty applies to imports at the border. GST is charged on the value at the point of sale. For domestic producers, the excise component still applies and the GST is collected at the retail stage. The combined effect is a clear gap between current prices and the prices expected in the new year.

Tobacco products will also face higher excise taxes, and pan masala products continue to be taxed at 30 percent. Policymakers expect higher prices to reduce consumption over time. In the short run, the price gap between 2025 and 2026 increases the temptation to stock up now and sell later at higher prices unless controls are enforced.

Explaining why officials introduced temporary curbs on sensitive products this year, Department of Revenue and Customs (DRC) Director General Sonam Jamtsho said the price jump from excise taxes can invite speculative behavior. He also outlined limits on who can trade during the interim period.

The risk of hoarding is higher with excise tax as it targets specific products, creating a clear before and after price gap. People might try to stock up now and sell later at higher prices.

He added that only established importers and distributors would be permitted to operate during the transition, with new entrants blocked until the new system stabilizes.

Are distributors and middlemen hoarding?

Many retailers suspect that some distributors and middle agents are building private inventories before the new year. Some are reportedly selling in sets, a practice that pairs slow moving items with popular ones to maximize returns. Others have allegedly refused regular clients or offered smaller allocations despite usual ordering volumes. Officials say there is a clear way to spot stockpiling in the months ahead. Any alcohol manufactured in 2025, then sold in 2026 at sharply higher prices, may be a sign of hoarding. Alcohol typically carries a 12 month shelf life, so older labels should not be flooding shelves in January if inventory has moved normally.

Consumers can report suspected hoarding if they find 2025 dated products sold at inflated rates next year. Shopkeepers also say they have asked distributors for larger shipments, but some requests have been turned down by manufacturers that are trying to avoid feeding stockpiles. The debate continues, with distributors insisting they are following rules while customers point to empty shelves and rising prices.

In a public notice aimed at curbing price gouging and irregular trading, the Competition and Consumer Affairs Authority (CCAA) and the DRC warned that the latest price jumps may not be traced to factories. They signaled an intent to scrutinize the supply chain inside the country.

The price escalations could be originating from domestic distributors or retailers.

The message aligns with claims from local manufacturers that ex factory prices have remained steady even as retail prices leap. That does not prove hoarding on its own, but it sharpens the focus on the stages between dispatch and final sale.

How the quota system works

To limit market disruption in the final months of 2025, authorities set interim controls on imports and distribution of alcohol, pan masala, and tobacco. Importers and distributors require permits and are allowed only limited quantities in the run up to the new tax. Imports were capped through November, with a planned pause on new imports in December. Businesses were told to ensure that permitted November shipments would meet December demand.

Locally made alcohol and beer are being released to verified distributors and retailers under monthly quotas. Shopkeepers in different districts say they are allowed to order only a few cartons per brand at a time, often five cartons per brand per order, which is well below their peak season needs. The DRC says quotas draw on last year’s supply and demand data to match genuine consumption rather than speculative purchases.

Officials also clarified that the quota system is not the reason for sudden price surges, citing their analysis of factory pricing and distribution volumes. The aim, they say, is to keep products available without creating a speculative frenzy. Penalties include suspension of permits for any business caught hoarding or inflating prices.

Impact on shops, bars, and consumers

Small groceries, hotel bars, and karaoke lounges report frequent stockouts. Deliveries take longer to arrive, and some outlets have gone weeks without receiving any beer despite repeated orders. Restaurant owners say they have had to reduce menu variety and ration popular items to avoid empty fridges during busy nights. Consumers who expected seasonal gatherings during winter are finding it hard to plan within their usual budgets.

The pinch goes beyond beer. Cigarette prices rose sharply in recent weeks, with a box of 20 packets moving from around Nu 2,000 to about Nu 2,600 in Thimphu. The trend in pan masala and other excise products is similar. Many customers say the sudden increases, well before January, have strained monthly spending. Manufacturers reiterate that factory rates are unchanged, which puts the spotlight on margins absorbed by the middle of the chain.

Several bar owners say some dealers refused supplies outright or asked them to accept mixed sets of brands to get any stock at all. That practice forces buyers to take slow movers to access high demand products. Customers who do get beer are paying up to Nu 100 per can in certain eateries. For families and young workers, these price shifts are being felt immediately.

Seasonal demand or market manipulation?

Peak season demand during Diwali and Dashain traditionally tightens supply and can lift prices across the region. That seasonal pattern is part of the current squeeze. Yet this year, manufacturers say production lines are steady and dispatches continue. The Army Welfare Project’s wines have still been reported out of stock at the source, which suggests inventory pressures. The broader picture points to a combination of seasonal peaks and strategic withholding along parts of the chain.

When prices jump ahead of a well telegraphed tax increase, a classic incentive appears. Holding stock now and releasing it later can generate quick gains, especially if checks are weak. Set sales and controlled allocations are often used to increase margins without posting an explicit price change for the most popular items. The interim quota and permit system is meant to prevent that outcome by limiting volumes and tightening oversight.

Retailers argue that quotas are too tight for year end demand. Authorities reply that these limits are based on historical data and are intended to keep supply moving while reducing the incentive to stash goods. The friction will likely persist until inventories and permitted imports are better aligned with real consumption.

Government checks and enforcement

A joint inspection and verification team has launched random market checks to identify inflated prices, hidden stocks, and improper sales tactics. Inspectors are reviewing invoices, comparing retail prices against factory rates, and verifying whether sales practices comply with quotas and permits. Officials say they have received formal complaints about inflated beer prices and continue to field calls from consumers across several districts.

Authorities warned that any business caught hoarding or hiking prices unfairly during the transition can lose import or distribution permits and face penalties. Distributors have been instructed not to stockpile and to keep products available at all times, and not to overcharge customers. Alongside business checks, consumers are being encouraged to report suspicious behavior so regulators can trace where the price pressure starts.

Earlier guidance from the DRC reinforced limits on market participation during the interim period. Only those with a track record of importing these goods are allowed to continue, with new market entrants barred from joining the trade until the new tax structure settles. That move aims to block fly by night operators who might appear only to exploit the pre tax window.

Health goals behind the tax overhaul

The tax reform is not only about revenue. Bhutan’s leaders have framed the change as a public health measure to curb the use of alcohol, tobacco, vapes, e cigarettes, doma mixtures, and pan masala. Harmful use of alcohol strains families, contributes to injuries and violence, and is linked to non communicable diseases. Higher prices are one of the most widely used tools to reduce consumption of harmful products. Over time, health and social costs can fall if fewer people drink heavily or smoke.

Three taxes now apply to alcohol starting in 2026. The excise is based on pure alcohol content and is designed to nudge consumers toward lower strength products. Customs duty applies to imported goods at the border. GST is a broad based consumption tax of 5 percent. The effect is cumulative. The combined taxes are expected to raise final shelf prices for many popular brands and reduce harmful consumption across the year.

Transitions to new tax systems often generate short term stress. That is why the government introduced temporary quotas and import controls, and launched inspections. The aim is to manage the shift, maintain availability for normal consumption, and stop unfair trading by a few actors who try to game the price gap.

How to spot and report hoarding or overcharging

Consumers and honest traders can help keep the market fair during the transition. Basic checks and simple documentation make it easier for authorities to act quickly.

• Check manufacturing dates. Alcohol produced in 2025 should not flood shelves in early 2026 at sharply higher prices. Report suspicious lots.
• Compare posted prices with receipts. Keep invoices or screenshots showing what you paid and where.
• Be wary of set sales that force you to buy slow movers to access popular items. Report coercive bundling.
• Ask for the current factory price or official retail guidance when in doubt. Look for consistent pricing across multiple outlets.
• Contact the CCAA or the DRC with basic details, such as product name, date code, seller, and price paid. More detail helps regulators trace supply.

What retailers can do now

Retailers that want to avoid penalties and maintain customer trust can take practical steps. Follow assigned quotas closely and avoid unnecessary bulk orders. Do not hoard or bundle products in ways that mislead buyers. Maintain clear price lists and keep records in order. Rotate stock so that older inventory sells first. Work with distributors who can deliver regular, smaller quantities, rather than chasing large one time allocations that invite suspicion.

Transparent behavior now can preserve a healthy customer base in the new year. Those who engage in fair pricing and timely restocking will be better positioned when the tax changes settle in and demand patterns normalize.

The Bottom Line

• Alcohol shortages and price spikes are spreading across Bhutan ahead of the January 1, 2026 tax change.
• Factory prices remain steady, but retail prices for beer and other alcohol have risen sharply.
• Authorities suspect hoarding by parts of the supply chain and have launched random market checks.
• The new tax package includes 100 percent customs duty, 5 percent GST, and Nu 1,200 per liter of pure alcohol excise.
• Interim measures cap imports and distribution through quotas and permits, with a pause on imports in December.
• Businesses face penalties, including permit suspension, for hoarding or overcharging.
• Consumers are urged to report inflated prices, forced set sales, and 2025 dated products sold at higher rates in 2026.
• The tax reform aims to reduce harmful consumption and related health burdens over time.