Alcohol home delivery: Why is it not cheers yet for Zomato, Swiggy

Brianne Day makes a wide array of wines from the Willamette and Applegate Valleys in southern Oregon. Along with the usual pinot noirs and chardonnays, she also uses unexpected varieties and makes creative blends that are always a treat to try. (Representative Image)

Easing of norms for home delivery of alcohol in Delhi has not lifted the spirits of food-tech platforms such as Zomato and Swiggy that kicked off this service in some parts of India last year.

While Zomato has already stopped the service across Jharkhand, Orissa and West Bengal, the three states it started off with, Swiggy has pulled out of Jharkhand and is running across just two states currently, though it remains bullish about its potential.

Regulatory bottlenecks, lack of cooperation from the administration and resistance from local retailers who see aggregators as their long-term competitors, have thwarted the growth of the segment.

The two companies had launched alcohol delivery with much fanfare in May 2020. Both companies were serious about this opportunity and were discussing with other state governments to start operations across different cities.

Demand for alcohol jumped after the pandemic-induced lockdown last year.

The decision to branch out looked like a no brainer -- until the companies started facing the regulatory nightmares first hand.

Unlike food, alcohol delivery is a highly regulated market and a state subject.

It started with Jharkhand rolling back home delivery of Indian made foreign liquor (IMFL) only a few months after pioneering it, citing poor demand and reluctance of liquor sellers to tie up with aggregators.

Retailers procure a license from the state government to sell liquor. The license fee is very expensive and may go up to hundreds of crores for a specific zone. Various states like Maharashtra don't even issue fresh licenses easily. So, there's a lot of value to a retail license.

If a retailer wants to shut down his business, he can sell off his license to somebody else at a high premium.

"Retailers have seen them as competitors and long-term threat. Besides, there's a lot of value to a retail license which is not there in any other industry. Therefore retailers are very protective about their turf," said Amrit Kiran Singh, executive chairman of the International Spirits & Wines Association of India.

According to IWSR Drinks Market Analysis, around 2% of the value of all alcohol drinks traded around the globe was sold through e-commerce in 2019.

However in India, a major chunk of the deliveries is instead contributed by chhotus (staff worker of the retailer) delivering it to regular customers of who place their orders on a call or WhatsApp.

"The level of confidence retailers have with their own staff is very high as compared to a third-party aggregator," said Singh.

While orders surged following the lockdown, as soon as that eased, people went back to shops.

Swiggy and Zomato did not comment for the story.

However, according to an industry source, some states also need the delivery boys to have a special permit to deliver alcohol. Which means that not every resource available with the companies can be utilised.

"The cops would often stop delivery boys wearing t-shirts of the aggregators and question them for carrying so much alcohol on them. The delivery boys of the retailers on the other hand would get away by stating that the alcohol was for their own consumption," said the person cited above requesting anonymity.

Delivery boys carry a prominent chiller case through which bottles are delivered which makes it easier for the cops to identify them.

The apps also demand government identification proof from customers before placing orders. It is a onetime process, however according to industry sources, not every person is comfortable sharing his Aadhaar or PAN details on food delivery apps.

Some states also capped the delivery charges at Rs 100 for orders worth Rs 1,000.  Beyond that for every Rs 500, charges could go up by Rs 25 with a ceiling of Rs 300 on delivery charges.

"Aggregators will never be able to make money out of this. They started it off because for them the eye balls mattered. There is a lot of corruption and political ill will in this business. If you make it digital, all that goes away," said an F&B firm founder requesting anonymity.

At a retail outlet, every staff member is also supposed to be registered in the state's excise department. If something was to go wrong, the person can be nabbed within no time.

However it hasn't been that simple for the aggregators to obtain permits on behalf of the delivery executives.

States also have different possession limits. "You can order 100 kg rice from Amazon, nobody will question. But you cannot order 100 bottles of liquor online," said Rahul Singh, founder and chief executive of The Beer Cafe.

While Swiggy did not comment for the story, a senior executive requesting anonymity said the company was bullish about this segment and had grown manifold in the last six months. Swiggy is also learnt to be engaging with various states to start alcohol delivery including Delhi. "Officials in Orissa and West Bengal have been very supportive and collaborative," said the executive quoted above.
To begin with, state governments had offered multiple reasons to grant permission for online alcohol delivery. For instance, Odisha government had cited long queues in front of liquor shops, among other reasons for allowing liquor deliveries. It said that the demand was also high.

However this year, the situation is starkly different. The pandemic has taken a ginormous shape with the common man more concerned about the health issues of his family than anything else.

The Delhi government on June 2 made a provision in its excise rules that paves the way for home delivery of Indian and foreign brands of liquor in the national capital through mobile apps or online web portals. So far it was only available for customers sending in requests through email or fax.

Once rolled out, liquor vends possessing L-13 license, will be allowed to deliver liquor at the doorstep of people through orders received using mobile apps or online portals.

However by no means it means that hostels, offices or institutions can get booze delivered at their doorsteps.

Needless to say 'bottle'-necks eased but hiccups remain!