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30% spike in liquor sales; industry feels strain on pipeline, asks permission for more shifts

Industry bodies such as the Confederation of Indian Alcoholic Beverage Companies (CIABC), the International Spirits and Wines Association of India (ISWAI) and the All India Brewers' Association (AIBA) said refilling stocks at retail outlets is a major challenge under the current circumstances due to several issues in supply chain and labour shortage.

May 05, 2020 / 10:01 PM IST
Representative Image

Representative Image

Faced with 20-30 percent spike in demand after liquor sales were allowed from Monday, the alcoholic beverages industry is asking state governments to allow them to operate more shifts at distilleries.

Industry bodies such as the Confederation of Indian Alcoholic Beverage Companies (CIABC), the International Spirits and Wines Association of India (ISWAI) and the All India Brewers' Association (AIBA) said refilling stocks at retail outlets is a major challenge under the current circumstances due to several issues in supply chain and labour shortage.

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Spirits manufacturers, however, termed long queues outside liquor stores, as people in different parts of India braved the blazing sun, rains and even hailstorms in some parts to get hold of booze, a "temporary" phenomenon due to pent up demand.

They also welcomed the Chhattisgarh government's move to allow only home delivery of liquor through online sales but at the same time cautioned against the 70 percent hike in duty on alcohol products by Arvind Kejriwal-led Delhi government.


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Commenting on liquor sales which were allowed from Monday, CIABC Chairman Director General Vinod Giri said sales of around Rs 70 crore were reported in Karnataka as the vends reopened after a gap of almost 40 days. "This is more than two to three times the normal sales."

In Uttar Pradesh around Rs 100 crore sales have been reported which is again 40 to 50 percent jump,” he said, adding even in Delhi sales were "higher" on Monday but "unfair to compare with pre-lockdown days as out of its 800 liquor outlets, only around 150 were open".

Stating that the steep demand for liquor is expected to continue for a week or so, Giri said that on an average around "20 to 30 percent" more sales happened and similar kind of sales were expected on Tuesday.

Commenting on challenges faced by the industry to meet the high demand and maintain stocks in outlets, he said, "The whole supply chain has to come back to full otherwise most of the outlets would run out of stocks".

"It (production) takes more time than starting retail sales, where the stock was pending and all you have to do is just pull the shutter up and start selling."

"Factories would take some time. Hopefully, we can restart before the pipelines are dry. We are trying our best to get the supply chain to kick in again. I think it will take 2-3 weeks time to get the supply chain working properly," Giri said.

According to him, manufacturing in the liquor industry is more complex as a whole set of permission is required and getting the plant going takes some time.

Expressing similar views, ISWAI Executive Chairman Amrit Kiran Singh said that demand in the sector is very high and to fill up the inventory, several liquor makers have approached the respective state governments to allow one more shift.

“Right now we are asking for an extra shift of production. Though distillery is not a high labour-intensive manufacturing business, at bottling plants we have problems, where we can right now produce only 60-65 per cent of our capacity,” he said, adding that "all companies are now requesting the state excise department to allow them to operate one more shift.”

According to Singh, liquor is witnessing high demand because there is uncertainty about regular availability and people will hoard it to a certain extent.

When asked about the crowd at stores, he said, "In Delhi, it would come down soon, because of additional tax while in the other parts of the country it is already almost normal.  It would take 15 to 30 days to restore production and supplies."

However, AIBA Director-General Shobhan Roy assured that the capacity should not be a problem as the demand is less compared to normal days because a lower number of shops are operating.

"The supply chain route now has to fill up otherwise retail would go dry...," he said adding "it would take another 10 to 15 days to fill up the supply chain".

Commenting on the demand Giri said that the industry had earlier estimated that there would be “initial overstocking” the liquor of around 20 to 30 per cent by the customers.

“Apart from stocking at home, there is no other phenomenon driving the behaviour. It's mostly because of the panic buying by the customers,” he said adding, “What we are seeing is actually an inflated number and it's for a few days. We would not see this in the long term. Sales would settle down very soon. It's a temporary phenomenon.”

However, Giri also added that this temporary increase in sales would not help the liquor industry to recover the losses made during the lockdown period.

“Overall, if you ask, it would not affect to recover the lost sales by more than 5 to 10 per cent because on trade which is 70 percent of the business is still shut. Still, not many outlets are open."

Over the Delhi government's decision to levy 70 percent cover tax on the liquor, Giri said that this could be done to manage the crowd, but it may impact the sector.

"There are many ways to manage the rush instead of the price increase and if it is for the long term revenue increase, then I am afraid. This is going to be very counterproductive and this would affect the demand very badly," he said adding "in the beginning one will not see the impact but soon sales would decline and so would the total revenue collection of the government.

He also suggested measures such as extending the shop hours and following the Kerala model, where tokens are being issued.

Singh also suggested this should be a temporary measure only.

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first published: May 5, 2020 09:54 pm

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