The liquor trade in Maharashtra is up in arms as the State Government has passed a resolution mandating that all liquor vends, be it shops, bars, hotels with liquor licences etc to install cameras with artificial intelligence and machine learning features, each said to be costing ₹4.2 lakhs.
The Government Regulation was announced just one day prior to the Election Commission announcing the dates for the elections to the Maharashtra Assembly and the Model Code of Conduct coming into play, leaving the liquor trade in a hapless state.
The liquor trade is approaching the courts over this order which they believe is going to lead to ‘over-regulation’ and ‘monitoring’, besides becoming another tool for corruption. The Government’s contention has been that it wants the vends to install the cameras to ensure that these vends do not sell liquor to underage youth.
The trade terms this measure as ‘draconian’ and another way for the government to harass and make money. It is estimated that with the implementation of this order, the liquor vends in Maharashtra will cough up nearly ₹3,000 crores, with Mumbai accounting for nearly ₹100 crores.
One Vendor Likely To Benefit
The entire order, the trade states, appears ‘fishy’ as only one company is the single vendor in the absence of other suppliers. The Excise Commissioner, Vijay Suryawanshi, however, has clarified that the government only had specified the technology and not the company from whom the cameras could be purchased. He said there are three to four vendors supplying this type of equipment.
The government has initiated this on ‘an experimental basis’ in Mumbai to begin with and on successful implementation here, it plans to roll this out across the State. Soon other states may follow, leading to ‘keeping the liquor trade in a vice-like grip’. The liquor industry, as such, is highly regulated and this new rule will adversely impact businesses.
As per media reports, Pivotchain, a video analytics company, helps secure Government and private companies’ physical infrastructure with large scale Artificial Intelligence driven Video Surveillance (RAVEN AI). They leverage computer vision to provide maximum performance to vision-based systems when solving day-to-day automation challenges at government and military premises, airports, and logistics centres.
The liquor trade members wonder why the need for such sophisticated systems, best usage scenarios being government, military premises etc. There are wine shops, bars, permit rooms etc which number over 2,000 in Mumbai alone and another 1,500 in the metro region. The software company has got three distributors, reportedly owned by one individual, and this has raised doubts on the entire move itself. The government however maintains that these cameras will help track the person (minor or those indulging in criminal activities) with all his or her background and in real-time.
Constant Monitoring Of Liquor Stores
The liquor vends are seeing this as another way of ‘harassing’ the trade. With elections round the corner, the Excise Department has announced guidelines and one of which states that “Licence holders must share a photo of their shop’s closure daily in the group of excise officers and liquor licence holders to confirm adherence to the specified closing timings. Besides, they need to update their shop’s opening purchase, sales, and closing details daily before the store closes. These updates must be logged into the Excise Department portal using individual logins assigned to each licence holder.”
The Excise Department has cautioned that any violation of the guidelines would lead to stricter penalties. As per guidelines for consumers have been advised to purchase liquor well in advance as shops may close earlier than usual time. They are also required to carry valid permits (permanent or temporary) while purchasing, carrying, or possessing liquor in Maharashtra.
The Ron De Ugar Rum comes from Ugar Sugars Works Ltd who have been in the Sugar business for about 75 years. And as you know that manufacturing ENA is a natural extension of being in this business and in line with that Ugar Sugar also has a portfolio of spirit products in the market. This is their first rum product and is priced at Rs. 1300 in Goa for a 750 ml bottle. The rum features a 42.8% ABV and is currently only available in Goa and Karnataka, with plans to launch it soon in others states as well.
Why the Name?
It is common to believe if this rum is from India? The name suggests that it might be an international product and honestly I also thought for it to be one at first glance. But this is a 100% Indian handcrafted Rum and it is manufactured in the Ugar Khurd region, which is a small hamlet in the erstwhile princely state of Sangli in the West of India, on the border of Maharashtra and Karnataka. The region is a sugar manufacturing-focused township with large areas under sugarcane cultivation, which is where the distillery is based and also of course this rum is also made there. And since this comes from the Ugar region, its named after it, the ‘Ron de’ has been added to give it some flair of course.
Apart from the name there are few other interesting things about this Rum, and the most important is that this is made from cane spirits and not molasses. Most of the rums that you find in India are made from Molases, whisky’s also in fact. Much like Camicara Rum, which is also a small batch rum made from cane spirit, Ron De Ugar is mixed with mature 3-5 year rums and cane spirit.
Another interesting thing about this rum is the moniker on the rum. When you look at him it seems like an international figure, but this is actually Shivaji’s Naval Commander, Kanoji Angre, who use to monitor that belt and is also known as askilled navy chief hence used here.
Kanoji Angre features as the moniker on the label
How is it made?
So, how exactly is this rum produced? The aged rums are combined with cane spirits and left to mature gradually in Oakwood casks. Afterward, they’re mixed with fragrant spices to create a unique flavour. This rum is crafted and bottled at the Ugar Sugar Works Ltd. in Ugar Khurd, located in the Belagavi district of Karnataka.
The Rum is matured in Oakwood Cask
Packaging:
Similar to many other rums available in this segment, it comes in a canister. A marron base colour along with gold letterings make it look good and the canister also has some night texture with the picture of the Naval Commander Kanoji Angre on it. The shape of the bottle is similar to that if Monkey Shoulder whisky somewhat.
The bottle looks like Monkey Shoulder Whisky
Nosing:
With an alcohol by volume (ABV) of 42.8%, this rum is undoubtedly smooth while nosing. Its sweetness carries note reminiscent of vanilla, which is evident from the aroma it imparts. There’s a distinct and clear vanilla scent. While there’s not much spiciness, the scent is deep and intense. Taking a whiff of this rum can also provide a pleasant sensation, gently expanding one’s nostrils.
Tasting:
Talking about the taste, as expected, it’s smooth. When the spirit enters the mouth, it feels refined, smooth and also warm. The spiciness hits you slightly late just as the vanilla sweetness fades away. There’s a lingering texture on the palate, offering a warm and comfortable feeling. Interestingly, although the spiciness isn’t obvious at first sip, it becomes evident shortly after. The spiciness is balanced and not overwhelming, providing a relaxed experience. The finish is prolonged, felt at the back of the throat, and carries a warm sensation with a subtle hint of spice. Despite the enticing aroma of vanilla and sweetness, these flavours don’t translate as strongly onto the palate. For a rum with a 42.8% ABVit goes down smoothly.
Conclusion:
Priced at ₹1300, this rum certainly falls into the premium category. It’s important to note that this isn’t a budget-friendly option, especially when considering potential higher costs in other states. But the makers are very clear that this is meant to be a handcrafted small batch rum. While the rum is good I would’ve been happier if it would’ve been priced at around Rs. 900 – 1000, it would’ve flown off the shelves then. But overall you must try this for sure, atleast once.
Recent years have seen the rise of craft beer, a new crop of premium beer produced in small batches by independent producers. There are now strong indications that the growing demand for craft beer is paving the way for new microbreweries in India.
The beer industry in India has emerged in the last two decades to become a thriving money spinner today. Just a few decades ago, it wasn’t commonplace to find modern bars, restobars, lounges, and even friends sitting over a few beers. Today, there’s a new culture of brewing in India, even among millennials and Gen Zs, and beer has become trendy. As of 2022, the beer market was valued at 383.6 billion, growing at a CAGR of 8.1%, and expected to reach 622.4 billion by 2028.
Recent years have also seen the rise of craft beer, a new crop of premium beer produced in small batches by independent producers, with an emphasis on new and evolving flavours, enthusiasm, and techniques. There are now strong indications that the growing demand for craft beer is paving the way for microbreweries in India. Some industry players believe this is only the start of a journey that can transform the beer scene much more significantly.
Craft beer flexibility and a burgeoning segment
There’s a growing crop of craft beer producers and brands in India who seem determined to take over the beer market with what they call a breath of fresh air. “Being true to style and ingredients, the experience that craft beer provides in terms of flavour, aroma and array of styles has led to the growth of craft beer the world over. We often say that once one has tasted true craft, he’ll never go back to industrial lager, especially if craft is available within reach.
“This is the reason that the world and, indeed, India are seeing the growth of microbreweries. Industrial lager literally offers one-style-fits-all products, whereas craft gives the choice back to the consumer for its preferred taste profile and styles,” said Upesh Gulati, Founder, Strategist, and Master Brewer, Effingut Breweries Pvt Ltd.
Over the years, Effingut has taken pride in introducing patrons to various different styles from around the world. With 16 different craft beers on tap, there is a flavour for each and every patron to enjoy. As of today, Effingut has a pan-India presence with three different verticals across four cities that cater to any kind of patron. This includes the Effingut 2 Go boutique stores, Effingut Bistros, and The Effingut Brewpubs and Taprooms.
Rather than release large batches of single-flavour, often mundane beers, microbreweries offer a variety of tastes and flavours based on the changing preferences of consumers and innovativeness of producers. As more adventurous beer enthusiasts emerge, craft beer makers have to continually innovate and expand to meet growing demands. According to Dr. Nishant Grover, Brew Master at Hotel The Royal Plaza, craft beer has quickly become a trend in India.
“There are several factors responsible for the growth of microbreweries in India. First is the shifting consumer tastes and the desire for distinctive and expensive beverages, as well as the fact that they are becoming more daring and discriminatory in their taste preferences. Second, increasing disposable income has also contributed to the growth of microbreweries, and lastly, we must acknowledge the encouraging government policies that are making microbreweries like our own The Royal Brewery Bistro to thrive,” he says.
Creating richer experiences with richer flavours
Microbreweries like The Royal Brewery Bistro are also being fostered by the craze for the culture by both local and international tourists and beer enthusiasts. This contributes to the overall tourism sector in India. Beyond that, the most important changes are the ones seen in the lives of budding beer drinkers in India. Younger Indians are becoming adventurous and seek out newer tastes each new day.
“After a long hectic day at work, people would stop by a bar to relax with a mug of their favourite beer in hand. But now with changing demographics, millennials and Gen Zs, people’s taste for beer is also undergoing a shift. They are looking for something different to explore and experiment including their consumption of alcoholic beverages. It was only 20 years ago that the first breweries opened in the industrial city of Gurugram. Today, there are microbreweries spurring across the country. Well-known internationally trained brewers are brewing international quality beer recipes in new-world pubs and bars across the country. As the best quality raw material is available with ease, production becomes less hassle, this is why craft beer availability is spreading across the country. Multiple yearly events on brewing and brewing equipment have also propelled information sharing and technical know-how for the industry,” explains Sandeep Singh Katiyar, CEO of The Finch, one of the finest premium luxury lounges in India, known for its extensive range of freshly brewed craft beer.
Breaking the odds, surging ahead
There’s still a long way to go. The craft beer culture may be growing in popularity, but it is still relatively young in India. Brewing has certainly become easier because quality ingredients are easier to come by and the manufacturing process has been simplified. However, there’s a long path ahead, and it is rough and rocky. There’s need for both the central and state governments to support the segment and its operators for them to thrive even better and ensure the growth is smooth.
As Katiyar of The Finch puts it, “The new brewery policies in Haryana, Karnataka, Maharashtra, Andhra Pradesh, Karnataka, Rajasthan, and Uttar Pradesh have helped craft beer businesses scale to new heights. However, craft beer and microbreweries yet have a long path to cover and have plenty of hindrances to cross in the upcoming years. The industry requires care, support, and nurture from the state and central governments. With the government’s support, the smooth growth of microbreweries can be ensured.”
The idea of authenticity loved by millennials is what is spurring the growth in the industry, and there’s need to support the over 200 microbreweries in India to succeed, while also ensuring new ones emerge, especially in far-flung cities and towns where they’re currently non-existent.
“It’s no secret millennials live life differently. Things no longer matter. Experiences do. Indeed, the potential rise of craft beer has paved way for many microbreweries in India. Millennials are clearly choosing experiences over things, fuelling the homecoming of microbreweries. They now know that there is much to the world of beer than just the dull and mass-produced bottled hard liquor. With hints of chocolate or sweet caramel, floral hops or fruity notes, rich coffee undercurrents and more – the options are tempting and endless. Today, India is now growing its own craft culture one sip at a time, and it will get even better in the future,” notes Anirudh Khanna Managing Director, Independence Brewing Company.
Diageo recently announced that Sir Ivan Menezes has decided to retire as Chief Executive Officer and depart from the Diageo Board on 30 June 2023, following ten successful years leading the Company. Debra Crew, currently Chief Operating Officer, will be appointed Chief Executive Officer and join the Diageo Board, effective 1 July 2023.
Ivan joined Diageo through the merger of Guinness plc and Grand Metropolitan plc in 1997 and has held a number of senior positions in the business including Chief Operating Officer; President, Diageo North America; Chairman, Diageo Asia Pacific; and Chairman, Diageo Latin America and Caribbean. Ivan has been an Executive Director of Diageo since July 2012 and has served as Chief Executive Officer since July 2013, overseeing an outstanding period of change, growth and high performance.
During Ivan’s tenure, Diageo has made great strides towards its ambition to become one of the best performing, most trusted and respected consumer products companies in the world. Diageo has grown significantly during this period, now selling over 200 brands in more than 180 markets and is today, the number one company by net sales value in Scotch whisky, vodka, gin, rum, Canadian whisky, liqueurs, and also tequila, a category in which only eight years ago the company had no substantive position. And in December 2022, Guinness became the number one beer in the on-trade in Great Britain for the first time.
Led by Ivan, Diageo has developed a leadership position in sustainability, becoming one of the top 1% of companies globally to achieve a “Double A” rating for Water Security and Climate Change from CDP (formerly the Carbon Disclosure Project), as well as a particularly strong stance on inclusion and diversity, with the company ranked number one in the UK, and number two globally, in Equileap’s 2023 Gender Equality Report. And with Debra’s appointment as Chief Executive Officer, women will make up more than 50% of Diageo’s Executive Committee from 1 July 2023. During the past decade, Diageo’s total shareholder returns have strongly outperformed the FTSE100, and the Company has continued its progressive policy to increase dividends every year. In January 2023, Ivan was awarded a Knighthood for services to Business and to Equality in His Majesty The King’s 2023 New Year Honours List.
Prior to being appointed Chief Operating Officer in October 2022, Debra was President, Diageo North America and Global Supply, leading Diageo’s largest market to 14% organic net sales growth in fiscal 2022, following on from 20% organic net sales growth in the prior year. Debra originally joined the Diageo Board as a Non-Executive Director in April 2019, before stepping down from the Board when appointed President, Diageo North America in July 2020.
Debra is the former President and CEO of Reynolds American, Inc., where she delivered strong performance growth before the company’s acquisition, having previously served as President and Chief Operating Officer, and President and Chief Commercial Officer. Prior to that, Debra spent five years at PepsiCo, where she served as President, North America Nutrition; President, PepsiCo Americas Beverages; and President, Western Europe Region. Prior to PepsiCo, Debra held positions with Kraft Foods, Nestlé S.A. and Mars, Inc.
Debra is a graduate of the University of Denver, earned an MBA from the University of Chicago Booth School of Business, and previously served as an officer in the United States Army. She currently serves on the board of Stanley Black & Decker, Inc., having previously served on the boards of Newell Brands and Mondēlez International.
Javier Ferrán, Chairman, Diageo, said: “The Board is enormously grateful for Ivan’s contribution over the past decade. Under his stewardship, Diageo has consistently delivered a truly impressive performance to become one of the most respected businesses in the world. Ivan has transformed Diageo’s global footprint, brand portfolio and strategic focus, positioning our business as a clear leader in premium drinks. At the same time as delivering consistent shareholder returns, Ivan has nurtured a diverse and talented global workforce and made significant progress on the most material sustainability issues facing our business. Ivan leaves Diageo extremely well positioned for future growth, and we thank him again for everything he has helped us to achieve.
The Board has diligently planned for Ivan’s successor, and we are delighted to have appointed a leader of Debra’s calibre to the role. Debra has been a highly valued member of Diageo’s leadership team in recent years with an impressive track record of delivery both at Diageo and across other global consumer goods companies. She has deep consumer industry expertise as well as proven strategic capabilities, strong operational performance and a clear ability to build and lead teams. I have no doubt that Diageo is in the right hands for the next phase of its growth.”
Sir Ivan Menezes, Chief Executive Officer, Diageo, said, “It has been an enormous honour leading Diageo over the past decade. I am extremely proud of what we have achieved during that time, and I would like to thank my 28,000 talented colleagues around the world for all of their hard work, creativity and passion. I would also like to thank the Board for their encouragement, challenge and support over the years.
The Tamil Nadu DMK government has issued a notification dated March 18, 2023 amending the Tamil Nadu Liquor (Licence and Permit) Rules of 1981 to allow the serving of Indian Made Foreign Liquor (IMFL) and Imported Foreign Liquor to guests, visitors and participants, at international and national summits and events like conferences, celebrations and festivals.
According to the amendment, a special licence would be granted annually by the Deputy Commissioner or Assistant Commissioner of the Excise Department to supply liquor in commercial premises like conference halls, convention centres, marriage halls, banquet halls, and sports stadiums. However, on April 24th, 2023 the Tamil Nadu government amended and removed marriage halls and banquet halls from the list of commercial premises where liquor was allowed to be supplied.
As per the amendment, the special license for possession and supply of liquor can be obtained by paying an annual registration fee of Rs. One lakh in corporation limits, Rs. 75,000 in municipality limits and Rs. 50,000 in other places. Subsequently, the fee per day for issue of permit for conducting one event, whenever conducted, is Rs. 11,000 in corporation limits, Rs. 7,500 in municipalities and Rs. 5,000 in other places respectively.
The amendment also said that special license for one time possession and supply of liquor in non-commercial premises during conduct of household celebrations, functions, parties etc is Rs. 11,000, Rs. 7,500 and Rs. 5,000 in corporations, municipalities and other places respectively.
The new rules state that the licensee shall obtain supplies from the Tamil Nadu State Marketing Corporation Limited (TASMAC) wholesale depot nearest to the place of events or from such other source as the Deputy Commissioner / Assistant Commissioner (Excise) may appoint or approve, subject to such conditions as he or she may stipulate and as per the quantity of the supplies approved by them. All such applications have to be made online, prior to seven working days from the date of conduct of the event to the Deputy Commissioner / Assistant Commissioner (Excise) in the districts in Form F.A.1.14, along with a copy of the challan of the fee remitted. Then these designated officers will grant a license in Form FL-12 with prior approval of the District Collector.
The issue of liquor under FL-12 special license may be in pegs / bottles for consumption, the Amendment said.
As per the amendment, the licensee has to transport the liquor after obtaining the transport permit in form FTP . 1 from the Deputy Commissioner / Assistant Commissioner (Excise) of the concerned district. The transport from the source of supply to the licensed premises shall be in accordance with the provisions of these rules. However, the amendment does not mention any fee for obtaining transport permit.
Further it said that a no-objection certificate from the Commissioner of Police, for events held within corporation limits and from the Superintendent of Police for events held in districts, should be obtained.
Meanwhile, the Minister for Electricity, Prohibition, and Excise V Senthil Balaji announced in the Tamil Nadu Assembly that the government would be deciding on the closure of 500 liquor shops across the state within this year. He mentioned that 96 shops run by TASMAC had violated norms. There are 5,329 retail liquor shops run by TASMAC.
“We are following the norms that other states are following. The IPL management had sought permission to serve liquor in the stadiums during the matches. Considering such international sports and events, we have decided to grant permission,” the minister said.
Opposition Condemns Move
Opposition parties condemned the move of allowing special liquor permits. The Tamil Nadu Bharatiya Janata Party (BJP) President K Annamalai said in a statement that this was an effort to increase the income of distilleries run by DMK leaders. “The DMK came to power by giving assurances that it would close liquor factories and retail shops, but Tasmac is trying to boost the sale of liquor each year by fixing a ceiling limit without bothering about the people. This move will lead to social disorder.”
Around the same time, the Pattali Makkal Katchi filed a public interest litigation at the Madras High Court and the spokesman of the party, Advocate K Balu, termed the move “highly condemnable”. He said the G.O. amending Tamil Nadu Liquor (Licence and Permit) Rules 1981 is illegal, unjust and against the public interest.
“The FL 12 special licence for serving liquor at conference halls, convention centres, marriage halls, banquet halls and sports stadium is contrary to the 2017 guidelines issued by Supreme Court to protect the life of citizens under Article 21 of the Constitution,” he said. Serving liquor in public event venues would cause nuisance to the public and deprive them of their right to peaceful life, the petition said.
AIADMK general secretary Edappadi K Palaniswami tweeted “The same DMK government, which says prohibition is the only goal, has kept liquor shops open for 12 hours. Now, it has allowed liquor in marriage halls and sports stadiums.”
DMK’s allies, MDMK general secretary Vaiko and CPM state secretary K Balakrishnan also urged the government to abandon the move. Other parties, including PMK, TMC(M), AMMK and VK Sasikala have condemned the notification.
There is an air of optimism as the threat of Covid is on the wane. A report on the growth of the alcobev and duty free market.
The global alcoholic beverages market was estimated to be at USD 1.58 trillion in 2020 and is projected to grow at a compound annual growth rate (CAGR) of around 3.5% between 2020 and 2023. India is one of the fastest growing alcoholic beverages markets globally, with an estimated market size of USD 52.5 billion in 2020 and the market is expected to grow at a CAGR of 6.8% between 2020 and 2023.
The alcoholic beverages industry contributes to around 1.5 million jobs in India and generated around USD 48.8 billion in sales revenue in 2019. The sector is open to foreign investments and many states offer subsidies for local manufacturing (for example, Maharashtra and Karnataka for wines). From the demand side, factors such as rapid urbanisation, changing consumer preferences and a sizeable and growing middle-class population with increased purchasing power have contributed towards growth in demand for alcoholic beverages.
According to industry estimates, the number of people consuming alcohol increased from approximately 219 million in 2005 to 293 million in 2018; it is projected to increase to 386 million by 2030. The share of the upper middle income group in alcohol consumption has increased steadily from 7% to 21% and is expected to increase to 44% by 2030.
The Global Duty-Free Retailing Market is projected to reach USD 127.83 billion by 2027 from USD 87.37 billion in 2021, at a CAGR 6.54% during the forecast period.
The Americas Duty-Free Retailing Market size was estimated at USD 21 billion in 2021, is expected to reach USD 22 billion in 2022, and is projected to grow at a CAGR of 7.37% to reach USD 32 billion by 2027.
The Asia-Pacific Duty-Free Retailing Market size was estimated at USD 36 billion in 2021, is expected to reach USD 38 billion in 2022, and is projected to grow at a CAGR of 6.75% to reach USD 53 billion by 2027.
The Europe, Middle East and Africa Duty-Free Retailing Market size was estimated at USD 31 billion in 2021, is expected to reach USD 31 billion in 2022, and is projected to grow at a CAGR of 5.71% to reach USD 43 billion by 2027.
The global duty-free and travel retail market is estimated to generate revenues of around $112 billion by 2023, growing at a CAGR of approximately 8% during 2018-2023.
The duty-free retail market in the Asia-Pacific, the largest market for duty-free retail products, is expected to cross pre-pandemic levels in 2023 as normalcy returns to the market and customer demand picks up, according to a report from GlobalData.
The rising number of middle-class population and rapid urbanisation is propelling the growth of the global duty-free and travel retail market. The increase in disposable income, improvement of standard living, and affordability and convenience of air travel are boosting the number of middle-class population travelling and purchasing products from these stores in the global market. The leading vendors are developing consumer-focussed businesses especially for this end-user segment to boost their travel retail industry size over the next few years.
In emerging countries such as India and China, middle-class consumers are the largest contributors to the economic development and have the spending capacity to promote the growth of the duty-free industry in the global market. With the surge in middle-class median income, their expenditure trend, travelling mode, and demand for premium brands will also rise, thereby, fuelling the travel retail sales. The rapid development and urbanisation will augment the development of infrastructure and offer access to better amenities in the global market. The building of new airports and ports will boost the revenues in the global duty-free and travel retail market.
The significant growth in the tourism industry is one of the key factors driving the market growth. In line with this, the increased time spent by passengers at airports due to security concerns and early check-in times is favouring the market growth. Additionally, the increasing preference for luxury and premium products, such as cosmetics, fragrances, and alcohol, is acting as another growth-inducing factor. Besides this, the rising air travel and proliferation of new international airports due to the rapidly expanding aviation industry is providing a considerable boost to market growth. Moreover, the introduction of touch screens and interactive retail kiosks, which offers seamless ordering and payment solutions, is providing an impetus to the market growth. Apart from this, the widespread adoption of new marketing strategies by brands, such as launching exclusive and limited products and partnerships with prominent distribution chains to gain a competitive edge, is propelling the market growth. Furthermore, the implementation of various government initiatives promoting international tourism is positively influencing the market growth. Other factors, including rising expenditure capacities of the consumers, emerging trends of digitalization in retailing processes, the rising consumer inclination for premium wines and spirits, and the introduction of pre-ordering applications, are anticipated to drive the market growth.
The global duty-free and travel retail market by product is segmented into fragrance and cosmetics, liquor, fashion and accessories, tobacco goods, electronics, watches, and confectionery.
However, some countries impose duty on goods brought into the country, though they had been bought duty-free in another country, or when the value or quantity of such goods exceed an allowed limit. Duty-free shops are often found in the international zone of international airports, sea ports, and train stations but goods can also be bought duty-free on board airplanes and passenger ships.
The competitive landscape of the industry has also been examined along with the profiles of the key players being Aer Rianta International, China Duty Free Group Co. Ltd., Dubai Duty Free, Dufry, Duty Free Americas Inc., Gebr. Heinemann SE & Co. KG, James Richardson Group, King Power International, Lagardère Travel Retail, Lotte Duty Free, Sinsegae Duty Free and The Shilla Duty Free.
Erik Juul‑Mortensen, President of the Tax Free World Association (TFWA), was also positive, an outlook largely based on the latest available travel data. Noting that, with the exception of China, every major market in the Asia‑Pacific region has partially or completely reopened to vaccinated travellers, he added, “Many markets have seen a strong recovery in March and April, and with pent‑up demand or ‘revenge travel’, two markets have just exceeded their 2019 duty‑free revenues for the same period, namely Australia and Singapore.
“This has happened despite the total number of travellers remaining relatively low. Duty‑free members have been reporting higher basket value, driven in part by pent‑up demand and less store congestion, and, therefore, more attentive service by store personnel. The pandemic has forced the industry to consider and adapt to a still‑changing environment. Our priority in duty free and travel retail is to keep pace with, even to anticipate, those new expectations. They will continue to evolve, and so must we.”
On duty‑free spending trends, Sunil Tuli, President of the Asia-Pacific Travel Retail Association and Group CEO of King Power Group, agreed, saying, “Around the region, we have reports of increased spending per passenger. Every day there are more people travelling – for instance, here in Singapore, Changi Airport passenger traffic more than doubled in April from March, approaching 40% of pre‑pandemic levels, just one month from when borders were fully re‑opened to vaccinated travellers. However, across the board, significant pain points exist in terms of stock shortages, security delays in product screening, partial retail space re‑openings, low staff levels, a reduction in routes, recession fears, and the Russia‑Ukraine crisis driving inflation.”
The likelihood of impending recovery in the duty‑free industry was championed by Pedro Castro, Chief Operations Officer Asia‑Pacific of travel retailer Dufry, who said, “Markets such as the US, the Caribbean, Central America and Europe have already seen a return to about 60% of 2019 levels, with only Asia‑Pacific still lagging behind at about 10%. Domestic travellers in some markets around the world are already slightly higher than 2019 levels, and business travellers are close to 2019 levels. The Asia‑Pacific region is ready to support a rapid return to normalcy.”
Ashish Chopra, CEO of Delhi Duty Free Services, provided a deep dive into the Indian market, an analysis likely reflective of the air‑travel and duty‑free industries across Asia‑Pacific markets – if not now, then in the near future, saying, “In the past two months, we have seen sales reach 90% of pre‑pandemic levels on the back of 70% of passenger traffic. There is definitely pent‑up demand, and we expect Delhi to reach 2020 levels by this year.” For now, the passengers were business and high‑middle‑income travellers, and therefore were willing to spend more, with mass‑market travellers expected later in the year.
According to a new report published by Allied Market Research, titled, “Airport Duty-free Liquor Market by Type: Opportunity Analysis and Industry Forecast, 2021-2027”, the airport duty-free liquor market size was valued at $8.9 billion in 2019, and is projected to reach $10.4 billion in 2027, registering a CAGR of 22.22% from 2021 to 2027. The airport duty-free liquor at airport shops have become a favourite destination for travellers who like to shop before starting their journey. This is due to the elimination of local import tax or the duties implemented by the government bodies.
The key players operating in the global airport duty-free liquor industry are Brown-Forman, Diageo, Erdington, Bacardi, Heineken, Glen Moray, Accolade Wines, Constellation Brands, Inc., Remy Cointreau, Pernod, and Ricard.
The airport duty-free shops have become a favourite destination for travellers who like to shop before starting their journey. This is due to the elimination of local import tax or the duties implemented by the government bodies. This results in lesser pricing of liquor or any other products such as cosmetics, perfumes, souvenir, and others, which are available at duty-free shops.
Due to Covid-19 crisis, there is a decrease in international travel, which has affected airport duty-free sales in large proportion. As the lockdown continues in major parts of the world, airport duty-free retailers have unsold stock, while some retailers are finding imaginative ways to keep trading. As the travel retail sector market is temporarily on hold, airport duty-free liquor has experienced crucial sales channel cutoff. Airport duty-free liquor sales declined to large proportion due to the closure of international flight operations.
By type, the whiskey segment accounted for the second maximum share in 2019, owing to increase in demand for whiskey across the globe.
For the past few years cognac has gained universal recognition as one of the finest spirit, which is distilled from grapes. Cognac is also getting popular in the airport duty-free liquor market due to the recent surge in demand for premium liquor.
By region, Europe accounted for the highest revenue in 2019 owing to the tourists from the Middle East, China, the U.S., and Russia contributing a significant part in the market. Also, love for travel is experiencing an upward airport duty-free liquor market trends among Germans, which significantly contributes toward the growth of the market.
With the vodka market on the upturn, KALS has launched their new Indian Made Vodka, Asio Vodka in the Tamil Nadu market. The vodka is triple distilled from a blend of different grains and filtered one time through seven columns of environmentally sustainable charcoal for a pure tasting smooth spirit.
The bottle is available in three sizes, that is the standard 750 ml, 375ml and the 180 ml. The ideology behind Asio was unique and KALS wanted to create something that provides a great experience to the consumer. In order to create that experience, they created a story that revolves around India. KALS states that no spirit brand truly embodies the spirit of India – and building this story right was their goal.
The company also hosted curated experiences for the consumers in small batches to sample the product. The taste and experience were then adapted to suit the consumer’s palate, whilst retaining the essence of the brand. KALS says that it has been receiving a great response so far. Currently Asio is available in the TN market and there are plans to make it available pan India soon.
The company is looking to develop more sustainable and lucrative brands moving forward. Together with the Brand Union they’ve embarked on a rebrand strategy to transform their products for the next generation of KALS fans. And the strategy with Asio is also similar to that of the other products, which is to ensure market penetration, increase sales of existing products or services on existing markets, and thus to increase our market share. This combined with market development, product development and diversification are part of the key growth strategies for Asio and KALS.
As per reports Maharashtra’s Excise Department will now, not allow to carry even 1 alcoholic bottle from Goa into Maharashtra. The news comes on the instructions of Shambhuraj Desai, the State Excise Minister due to the increase in the transport of the illicit alcohol across the border of Goa and Maharashtra.
According to the Excise officials there has been an increase in the confiscated liquor at the borders entering Maharashtra at various checkpoints, with smugglers carrying high quantity of bottles.
The Excise Minister has not only asked the officials to be strict, but also also asked them to invoke the MCOCA against them, which allows the Police to liable criminal charges. While the primary target of these will be smugglers who transport alcohol in large quantities, how this affects the regular consumer remains to be seen. Since it is common for consumers to buy alcohol at cheaper prices from Goa to bring home in other States.
Price has always been the biggest motivator for consumers to carry bottles from Goa into other States since alcohol bottles range from a disparity in pricing as it moves towards the upwards range. Most bottles have a price disparity of nearly 35-40% or more in Maharashtra/other states as compared to Goa. Although the smuggling is seen more in IMFL brands and not imported brands, a regular consumer is often seen carrying imported brands as well.
Updates for Flights from Goa:
Currently there is no indication that consumers aren’t allowed to carry alcohol in flights from Goa. While the focus of these checkpoints is expected to be on road, there isn’t any information on the alcohol carried by air by consumers. The stipulated limit for carrying alcohol from Goa is 4-5 litres by air. Although carrying even 1 bottle isn’t permitted by law, consumers do carry their stipulated limit often when flying out of Goa.
Ambrosia will try and speak to the Excise Officials to get more updates on the same and will update the article periodically. So do check back to see if there have been any changes to that rule.
With December around the corner, Goa is expecting a high influx of visitors like every year and it is expected that these users will carry alcohol back to their home States. Incase you are traveling by road then do expect some stringent checking at the Goa-Maharashtra borders, while the scenario with flights continues to be the same with no challenges yet for carrying alcohol.
But in an interview with TOI, Ravindra Awale, Kolhapur’s Excise Superintendent stated that they are going to set up portable cabins along the unattended roads between Goa and Maharashtra to plug in the smaller roots. “Right now, we have proposed action under section 93 of the Maharashtra Prevention of Dangerous Activities Act against repeat offenders. Applying MCOCA will help bring down the number of cases.”
Sterling Reserve B10 whisky is made by ABD, which is Allied Blenders and Distilleries, the largest manufacturer of IMFL spirit by volume. The whisky is priced at Rs. 1,350 in Maharashtra and it is available almost Pan India. The reason why this whisky is called ‘B10’ is because it is supposed to give the experience of 10 different flavours to the consumer. If you are more of a video person then you can check out the video review on top as well.
Before we start talking about Sterling Reserve let’s take a look at ABD. So ABD is a very renowned name in the industry and has been in the market for decades now. One of their best- known millionaire brands is Officers Choice, which also is a category leader in that segment. For ones who don’t know what a millionaire brand is, millionaire brand means that it sells more than a million cases in a year, which isn’t an easy feat to achieve.
Now what is interesting is that this is also a millionaire brand which means it automatically puts pressure on it to taste good. This whisky is placed in the same segment as Blenders Pride and Antiquity Blue. So basically, this is positioned in a category where you have some of the best premium and highest selling Indian whisky’s honestly. This whisky comes in two variants, B7 which is positioned in the popular category and of course this, which is the B10. If we talk about the blend of this whisky, then there isn’t much clarity about the age of the malts that have been used in this. But this uses imported Scotch malts, which means malts that have aged at least 3-year’s have been used. This is combined with the Indian grain spirits with the Scotch Malts used from different barrel origin including bespoke bourbon oak casks. Naturally there is neutral spirits that are used as well in this since it has Indian grain spirits as well. Now this whisky is also chill-filtered, which means it won’t change colour when you add ice or water to it.
Packaging
If we talk about the packaging of the brand, then it is very clear that ABD wanted to create an impact since it is a tough market and they have spent a considerable time on this packaging as well. In comparison with blenders and antiquity it is the only brand that comes in a canister, which shows how serious they are about this category. In terms of packaging, it gives you a feel of the premiumness like others as well. They’ve gone with the deep Purple as the base colour and I think it could be coz they want to stand out on the shelf and they’ve managed to achieve that as well to some extent. In terms of the bottle as well it is nice and reminiscent of Indian whisky bottles.
Nosing
In terms of the nosing you get some honeyed sweetness, nuttiness of the barley and a fruity and heathery nose.
Tasting
The ABV is 42.8% and it gives you that punch as you taste it. The flavours of oak are clear and also a sweet flavour also comes from the whisky. Although it feels like honey but it is more of vanilla. There is a fruit as well which I think it berries. The finish is meduim-longish and honestly it is difficult to identify 10 flavours honestly but the whisky does seem smooth.
Conclusion
So what do we think about the Sterling Reserve B10 whisky? For a price of Rs. 1,350 in Maharashtra it is already a very popular brand. It gives you that mix of nice flavours, smooth refines for the price and you really can understand why the people who have this brand swear by it and won’t touch anything else. It is not something that you can have on the rocks naturally like most of the whisky’s in this segment. But with water or a mixer of your choice is suited. Maybe you can try it next when you are going to have any whisky’s in this segment and let us know how it is in the comments.
The Covid-19 pandemic has continued to impact India since its arrival in spring last year. The government initially reacted by imposing a national lockdown from 23rd March to 4th May last year. The on-trade was completely closed, as were most liquor shops in every state. Places of work shut down, so many young office workers left the urban centres. With the on-trade stifled, retail purchases and consumption of beverage alcohol at home became the norm in most mainstream categories. In India, however, women and younger consumers still feel uncomfortable drinking in front of more conservative parents and family members at home. Limitations on space and refrigeration favoured spirits over beer, RTDs and – especially for young urban women – wine, all of which are usually consumed cold.
The implications of the pandemic response for India’s status as a federal republic soon became clear. The importance of excise duty income from alcohol, tobacco and fuel was brought into sharp relief as revenue streams dried up and the diminishing income from national taxes, such as GST, were used to offset fiscal shortfalls at state level. Most states responded by increasing excise duties – often suddenly and steeply – as well as charging taxpayers one-off cess payments, commonly levied by central governments for a specific purpose. Unusually, this cess (tax on tax), commonly levied by central government for a specific and clearly defined purpose (and not shared with state governments), has been applied in a number of instances at state level as a Corona-cess. Some states have been more reluctant than others to review, reduce or cancel such supposedly temporary measures. For instance, Andhra Pradesh – where the government had tried to enforce prohibition before the pandemic – imposed a 75% excise duty incre for two days just as the national lockdown ended last May; and on the same day, Delhi imposed a 70% cess on the maximum retail price (MRP) of all liquor, which remained until 7th June.
The timing of the lockdown could not have been worse, especially for beer. The category relies on young urban drinkers and after-work occasions and its peak season for consumption was about to start. When lockdown ended, bars and restaurants re-opened in most states, but were limited to 50% occupancy, and workers were slower to return to offices. Many are still working from home or – during Q1 2021 – have returned to it.
Compared to some countries, where citizens often remained risk-averse and pessimistic after the first lockdown, Indian consumer confidence seemed to bounce back quickly. Many Indians assumed – wrongly – that their everyday hygiene challenges afforded them a high degree of natural immunity to the coronavirus.
The past year has confirmed that India is squarely a brown spirits market. Whisky absorbs two-thirds of consumption in this market; brandy – with a strong presence in the south – takes 20%; and rum takes around half of that. In a total market that has shrunk by around one-fifth, whisky declined only slightly less than brandy and rum, which fell around one-quarter. Beer and RTDs suffered precipitous falls, deprived of many of the venues and occasions that had driven consumption forward. All clear spirits witnessed steeper declines in consumption than dark spirits: in each category, sales of domestically produced brands bottled in India (BII) fell away faster. Even allowing for the experimentation evident in categories such as Irish whiskey, consumers sought out brands that they knew, had earned equity and had consistent quality. In short, they sought out certainties.
Two other fundamental shifts have also occurred. Firstly, the premiumisation trend – evident before the pandemic – saw some importers shift their focus to retail, increasing its offering of high-end brands, which were previously targetted at Duty-Free and at the on-trade. Disposable income spent on going out to eat and drink before the pandemic was instead often redirected to premium-and-above products for at-home consumption. Secondly, as a corollary to this and confirming the pressure on the mainstream, was down-trading out of Indian-made foreign liquor (IMFL), either bottled in origin (BIO) or BII.
Budget-conscious consumers instead chose either country liquor or illicit alternatives, having long been deprived of licensed outlets in which to purchase their nips.
The on-trade closure has also impacted routes to market and the supply chain and it increasingly determines choice. When all outlets closed, some states permitted home delivery, which many thought heralded the long-expected rise of the e-commerce channel. In reality, this was an expedient option for retail outlets: e-commerce has not seen a consequent increase in regulation or investment since. On the contrary, drinks ordering apps, such as Hipbar, appear to have been actively discouraged.
The effects of a six-week shutdown of alcohol supply lasted long after it ended: restocking and logistics issues extended out-of-stock occurrences well into the summer months. Importers often found it difficult to source supplies as exporters were reluctant to ship to trading partners in an uncertain economy, not least because they wanted to avoid passing on rising logistics costs to consumers.
One of the responses, driven by leading country liquor suppliers, has been the emergence of intermediate or medium liquor produced locally: this refers to a price band of distilled liquor sold under licensed quota in certain states – presently Rajasthan and Uttar Pradesh only – competitively priced between country liquor/IMIL (Indian-made Indian liquor) and IMFL. Commonly the price, set by the state, is at a 25% premium to the country liquor price, a similar proportion lower than IMFL pricing.
This system has the additional benefits of almost guaranteeing state excise income and reducing the occurrence of country liquor-related health issues through better-quality product. In theory, this model should be attractive to many more states. In practice, its implementation may be limited by the relative scarcity of country liquor distillers able to produce medium liquor of the requisite quality. Nevertheless, with investment and a little covert encouragement from the states, that provision will doubtless evolve over time.
In a decentralised India, the domestic beverage alcohol industry relies on a relatively small number of states for its success. The top three states – Uttar Pradesh, Maharashtra and West Bengal – account for one-third of India’s population. The top six states account for half of the population. West Bengal is the only corporate state: the beverage alcohol industry is regulated directly through a state body. By contrast, the five largest states in the south are each home to beverage alcohol corporations.
This complexity and large size of India means that there are very few companies that are truly national. Even those that are considered national – thanks to a contract bottling network – still retain large regional brands in their portfolios. There is a small number of multinationals twinning domestic production with imports that are focussed on urban distribution shared among importers and wholesalers. India has a larger number of local distillers aspiring to convert their regional origins into a multi-region or national presence; and there are many smaller distillers, the majority of whom supply locally. Most distillers, therefore, will only be trading in one or two jurisdictions and navigating one or two bureaucracies. For the larger players, these challenges are manifold.
The second half of 2020 saw the Indian beverage alcohol market emerging quickly and largely unscathed from Covid-19 and lockdown. Leading spirits companies in particular were reporting quarterly revenues and volumes that had recovered to pre-pandemic levels. This was in spite of the on-trade remaining stifled, e-commerce failing to expand and the regulation and excise duty rises imposed by most states. However, by the second quarter of this year – the beginning of the new financial year for most corporations – this initial optimism about rapid recovery has somewhat evaporated.
The picture, though, is mixed. India’s federal state model shows up the inconsistencies between states: decisions can often be arbitrary, poorly thought through and political rather than practical, but a successful model in one state can be swiftly adopted in another. On the one hand, the Delhi state government’s legislation lowering the legal drinking age from 25 to 21 is positive for the industry. On the other, Andhra Pradesh will join Bihar, Gujarat and some other smaller states and territories to prohibit alcohol for around 250m people, which is nearly one-fifth of the population.
It cannot be overstated how the pandemic and its effects demonstrated the importance of beverage alcohol revenues to individual states’ budgets. Some state governments recognise this and are approaching their beverage alcohol policy with pragmatism by listening to the industry more attentively.
The key issues revolve around the temporary and permanent changes brought about by the pandemic. Office work may have changed permanently, calling into question whether or not urban on-trade lighthouse accounts will recover. It is uncertain when occupancy rates in on-trade venues rise above the current 50% constraint. The medium liquor system may see expansion into further states. It is also questionable whether premiumisation will persist or the second Covid-19 wave will dent consumer confidence fundamentally.
The wider economy, of course, is a determining factor. Declining disposable income has particular relevance for beverage alcohol spend. The industry is circumscribed by its investment in advertising and promotion. The pandemic has sharpened the senses of many executives and players, but left others close to collapse, unable to survive further uncertain events. States have pursued short-term solutions throughout the pandemic and it is unknown if this approach will persist. However, it is likely that the distilling capacity of the domestic industry will not grow. This has implications for all, given the contract-bottling model that has enabled the largest players to become truly national.
General Forecast Assumptions
On-Trade – In some states, the on-trade had re-opened up to 85% of its former capacity by Q1 2021. However, the occupancy restriction to 50% remains, so the real throughput is also likely to be at 50%. This will continue to affect beer and RTDs. Furthermore, on-trade sub-channels are re-opening at different rates.
Restaurants opened faster than bars; and bars faster than night venues. Whilst this appears to affect wine and premium spirits in higher-end outlets, the impact will be mitigated by the flexibility of suppliers, many of whom have switched attention to retail and targetting wealthier consumers.
Medium Liquor – Consumers in some states are now being offered a wider choice. Those who had traded down to country liquor may choose medium liquor instead of IMFL. Currently this is available in Rajasthan and Uttar Pradesh, but more states may institute this. A significant number of consumers may prefer the taste and the brands on offer in the category to IMFL.
E-commerce – When three of the larger eastern states – West Bengal, Chhattisgarh and Jharkand – permitted home delivery of alcohol, it was thought e-commerce would, at last, be stimulated by the lockdown conditions. They were soon joined by Orissa and Maharashtra. However, steep delivery charges, regulatory uncertainty, a reluctance to invest and a poor delivery-logistics framework continue to hamper growth, as well as the nature of Indian e-commerce defined on the invitation issued by the West Bengal authorities as “handling the electronic ordering, purchase, sale and home delivery of alcoholic liquors from licensed food [and liquor] outlets”. Retail competitors required to pay for annual licences have lobbied against the channel as well. Some significant platforms – Amazon, Flipkart (Walmart), Big Basket, Swiggy, Zomato and the mobile app Hipbar, reportedly backed by Diageo and, in Mumbai, Living Liquidz – responded to state-level invitations to get involved after the Supreme Court ruled in favour of home delivery from licensed retail. However, it has become clear that any bureaucratic encouragement of home delivery has primarily been one of a range of responses to the crowds that gathered outside liquor shops last year and, while recurring lockdowns may help to accelerate e-commerce, the channel will not significantly impact the industry for the foreseeable future. Informal delivery, where customers call up the liquor store and get an order dropped off by moped, already existed and will continue.
Regulation – Uttar Pradesh, India’s most populous state, had previously imposed a cess of 20 per bottle of beer. West Bengal, the fourth most populous state, increased consumer tax by 30%. Rajasthan, the sixth most populous, enacted both, adding20 per bottle and imposing a 10% increase in consumer tax. Their approach is unlikely to change. Additionally, the election in Bihar state did not return a government willing to reverse prohibition. Andhra Pradesh’s government was unable to enact prohibition but has discouraged some national players by making trading there problematic. However, it is assumed there is no foreseeable regulatory movement throughout the forecast period.
Consumer Base Expansion – India’s population is approaching 1.4bn, with less than half being of legal drinking age. The actual number of alcohol consumers is believed to be closer to 160m, only 7.5% of whom are women. Per capita rates for beer and RTDs remain low at around 1.2 litres for men and 150ml for women, re-calculated at 10 litres and 1.25 litres on estimated drinking population numbers. Wine has similar rates to RTDs, spirits are 1.8 litres per capita and nearly 15 litres on a re-calculated basis. There are more younger consumers joining the potential drinking population every year. Uptake by women reportedly increased during the pandemic.
At-Home Consumption – This trend is likely to persist beyond the pandemic. Wealthier consumers of premium spirits and imports spend for indulging at home and for gifts. The wedding industry will revive: most wine suppliers are focussing on higher-end offerings, educating consumers about its accessibility and suitability during meals, as well as drinking before and after. Beer and RTDs will find difficulty switching as their core message is based on going out and socialising rather than at-home consumption, and most consumers have insufficient refrigeration space at home.
Key Market Factors
Cultural – The legal drinking age varies from state to state. In most states it is 21, but 25 in the populous states of Haryana and the Punjab. In Maharashtra it is 21 for beer and wine, and 25 for liquor. Bigger states with a drinking age of 18 include Rajasthan in the north and Kerala in the south. Delhi is about to lower its LDA from 25 to 21.
Three states with larger populations prohibit alcohol. Gujarat has been dry for the longest, with Bihar and now Andhra Pradesh having imposed prohibition more recently. Outcomes are mixed, with Bihar and Andhra Pradesh reportedly having some of the highest per capita consumption rates for beverage alcohol nationally once illicit alcohol is factored in.
Demographic – A key driver of consumption has been urbanisation, particularly among younger LDA drinkers. The lockdown appears to have reversed this, with young office workers returning to their parents’ houses in smaller cities, towns and the countryside.
The overall population is nearly 1.4bn and grows by 15–20m or more every year. The drinking population is considerably smaller: at least half can only afford very cheap country liquor, which is largely unbranded alcohol with an estimated market of 250–285m cases.
The rapidly growing middle classes, who can afford premium-and-above, may number more than 150m. However, 98% of middle-class women and more than 20% of men are said not to drink for philosophical, religious or cultural reasons.
Some 49% of the population is aged under 19, and few drink, although younger consumers are generally more willing to consume alcohol than many of their parents. This leaves a market of between 25m and 30m people with the inclination and resources to drink IMFL.
Economic – There is little state support in India and wellbeing is the individual’s responsibility. With livelihoods uncertain but a young population inclined to optimism, the second Covid-19 wave may hit confidence hard and a volatile economy will see more cautious expenditure. Excise rates vary substantially from state to state even before the pandemic, which exacerbated the difference when states imposed cess payments to make up fiscal shortfalls.
A number of observers mention a shift to modern retail. This is consistent with state governments looking to secure the revenues they can expect from beverage alcohol and also with consumer expectations around improving retail venues.
Trade – Difficulties with the supply of stock have been widespread. It is reported that lack of supply inhibited sales, especially of premium products. The pandemic hindered logistics and rendered delivery more expensive. Brand-owner allocations have also reduced the agility to respond to demand.
A further element is that the phenomenon of medium liquor in Rajasthan and Uttar Pradesh offers more settled revenue for states and gives consumers an alternative to IMFL. One leading country liquor supplier reports now selling twice as much medium liquor as it does country liquor per month. India is unusual in that spirits demand is significantly more developed than demand for beer. While there is some interplay between the two with bang-for-buck consumers keen to maximise alcohol content per rupee delivery, there were some signs that demand for beer was beginning to develop separately.
However, strong beers of 8.5% ABV still represent more than 82% of demand. The first lockdown also affected trade, and was both severe and ill-timed – six weeks without sales, just before peak season for beer and RTDs. The on-trade revived in the second half of 2020 with near full re-opening in some states, but night and weekend curfews, combined with 50% capacity limits, continue to constrain this channel. The uncertainty of lockdown and the unavailability of liquor drove some consumers back down to country liquor, although not in the south where it is banned in five large states.
There was more limited up-trading by wealthier consumers. However, mainstream products, brands and players have been affected with some of the less financially secure domestic players closing for some months. In some of the larger states, competition in the beverage alcohol category is relatively open. In more there are state corporations set up as wholesalers and frequently as retailers too. In all states, beverage alcohol participants must navigate a web of licences, quotas and taxes, and sometimes incentives.
In certain key states, the regulatory authorities that control pricing have rationalised their price lists. In Delhi, Rajasthan, Madhya Pradesh and Haryana the correction has been downwards for higher-priced imports.
It is reported that there is shift to modern retail. This is consistent with state governments looking to secure revenues from beverage alcohol and also with consumer expectations around improving retail venues.
Political – Breweries have been investigated by the Competition Commission of India (CCI) which has now resulted in fines for collusion and operating a cartel. The reputational impact is more serious than the financial cost.
