After Jawan Deluxe rum, Kerala to launch its own brand of brandy

 Like in many other states, liquor is an important source of government revenue in Kerala. The state’s Finance Minister, K N Balagopal, announced in the state this month that small manufacturing units will be encouraged to make wine and other alcoholic beverages using fruits and crops other than food grains.

Balagopal also said old sugar mills at Thiruvalla and Chittur will be rejuvenated to make innovative products by retaining them in the public sector, a move aimed at creating more employment opportunities.

Liquor industry experts see the decision to produce wine and minor alcoholic beverages using fruit in the backdrop of the failed attempt by a company to make alcohol from tapioca in the 1990s.

A combination of factors -- high costs, absence of farming of tapioca on a commercial scale, the lack of a tapioca variety with a high quantity of starch, a shift by farmers to more lucrative rubber cultivation and migration to Gulf countries – was blamed for the failure. The spirit was costlier than that imported from other state.

The sugar mill at Chittur in Palakkad, re-named Malabar Distilleries, is now defunct but Travancore Sugar and Chemicals Ltd. (TSCL) at Thiruvalla, after closing down in its sugar division for want of sufficient sugarcane and the distillery division after a ban on  arrack, got a new lease of life from the production of rum.

Kerala’s own brand, Jawan Deluxe XXX rum, is one of the popular alcoholic beverages in the state, with demand outstripping supply.

The government-owned Kerala State Beverages Corporation Ltd. (KSBC), which has a monopoly on distribution of liquor, will be an active participant in the planned new ventures. KSBC chairman and managing director S Syamsundar spoke to Moneycontrol about the company’s plans. Edited excerpts:

How do you go about production of wine and minor alcoholic beverages from fruits? 

Once the government order comes, we will start work for installing a winery. KSBC will handle the production and distribution while the procurement and storage will be preferably by the cooperative sector. Apart from distribution in the state, we may also go for export to other states and countries. We hope to start it in the next financial year

Which are the fruits you are looking at for producing wine? 

Pineapple, banana and mango are the fruits we are considering. We are not looking at cashew now. The alcohol percentage will range from 4 to 12%. The government has announced this to enhance the income of farmers with value addition. We haven’t looked at the price factor yet.

(Kerala cultivates all the fruits mentioned above on a large scale. Pineapple produced in Vazhakulam has obtained geographical indication status).

What are your plans for the revamp of old sugar mills at Chittur and Thiruvalla? 

We will resume activities at Malabar Distilleries at Chittur. We are planning to start the production of a brandy from there. This will be IMFL (Indian Made Foreign Liquor)-like the rum and not from fruits. (Brandy and rum account for the majority of sales of liquor in the state.)

As for TSCL, we are going for major expansion to increase production. The rum produced there has huge demand and whatever is produced is sold out. (Production may go up from the present 7,300 cases a day to 12,000).

KSBC had given a proposal to start more outlets to reduce the queues at the present ones. What is the current status of the proposal? 

We had applied for 190 more outlets. There will be more emphasis on self-service facility. In fact, we are planning to gradually convert all the outlets to self-service mode. (At present, less than 100 of its total 265 outlets have a self-service facility).

We will also ramp up our website to increase online sales to bring down queues at outlets. Apart from the consumers, bars and clubs will also be allowed to book and buy liquor online.

Do you have plans to increase the number of liquor products available in the state now? 

Yes, we are planning to open up the market. At present it is in the clutches of about 15 companies which are operating as a cartel. We will invite more companies to the state which will help the consumers to have variety of products at better prices.

We may have to make the necessary changes to overcome the barriers to entry of newcomers. One change we are planning is to raise the warehouse space to store more products. (KSBC now stores liquor in 17 warehouses, mostly belonging to state and central warehousing corporations). We will construct a double deck at the warehouses at an investment of about Rs 35 crore.

The provisional figures for 2020-21 showed a 10% drop in sales revenue at Rs 13,212 crore. Are you expecting a better turnover in the current year? 

We expect to make good the losses made last year. After the easing of COVID restrictions, festivals like Onam and Christmas saw good sales this year. (People aware of the development said sales have crossed Rs 14,000 crore and could end up near the record Rs 14,707 crore achieved in 2019-20.)