Supreme Court upholds Kerala HC order of liquor ban

In a big jolt to the alcohol industry, Supreme Court has upheld the liquor ban in Kerala, state with the highest per capita consumption of alcohol in India. The liquor market in Kerala is pegged at roughly Rs 10,000 crore, with around 24 million cases sold in FY15. Rum and brandy account for 80 percent of total consumption.Dismissing the plea seeking removal of liquor ban of many hoteliers, the apex court has made Kerala the fifth state with such a ban. CNBC-TV18's Ashmit Kumar reports that the United Democratic Front (UDF) government has proposed to phase out alcohol entirely from Kerala in 10 years. The move banning non-5 Star properties from serving Indian-made foreign liquor (IMFL) is considered to be the first step in the direction of a complete phase out. Earlier in 2014, the Kerala government had passed orders directing only 5-star hotels to sell IMFL. Such properties are less that 35 in the entire state. Meanwhile, the companies that are likely to get impacted include –United Spirits, Radico Khaitan, Tilaknagar Industries and United Breweries. While United Spirits sells 9 million cases of McDowell range of spirits in Kerala commanding about 35 percent of market share, United Breweries enjoys a 70 percent market share with its range of Kingfisher beers selling about 7 million beer cases in the state.Speaking to CNBC-TV18, Nitin Mathur of Societe Generale says this is a big negative for hard drinks industry as roughly 15 percent of IMFL volumes come from Kerala.In addition, for the last five years, spirit companies have been unable to hike prices, leading to margin pressure.