Category Archives: popular-posts

Innovations in Packaging, Adding to the Consumer Experience

The total sales of Indian-made foreign liquor (IMFL) products were 388 million cases in 2022, up from 305 million cases in the previous year with demand in all major segments like rum, gin, vodka, whisky and brandy rising. The rise has been the sharpest in premium products with their portfolio now accounting for a fifth of all the whisky sold in India and consequently demand for glass bottles and packaging material has shot up.

The bottling and packaging segment is a key component and along with ENA it accounts for over 65% of raw material costs for IMFL operators, who have been requesting price increases from the respective state governments, to offset high input costs.

While excise departments have their own yardsticks to concede price rise, the alcobev industry has to think of ways of bringing down raw material costs. One of the ways is to push their supply partners to go for innovations in glass bottling and packaging. Already, we are seeing a number of new packaging and bottling solutions such as bag-in-box, ceramic glass bottles, bag-intube, whiskey pouches and more. But the premium segment cannot do away with glass bottles as glass has its own charm. Design comes in play here.

All in all, the market of the glass bottle and packaging industry is expected to grow phenomenally, even as some companies are giving up mono-cartons. Extensive R&D to introduce biodegradable and sustainable packaging materials due to rising environmental concerns are fast gaining currency and companies are becoming increasingly environmentally sustainable entities.

Value creation without cutting corners

In view of its importance, Ambrosia at its 2023 Indspirit Conference in Delhi, organised a session on ‘Innovations in Packaging for value creation: cut cost without cutting corners’. The panellists included Srinivas Mantri, Sr Procurement Manager, Beam Suntory India; Vinod Sharma, Assistant Vice President (Commercial) Alcobrew. The session was moderated by Bhavya Desai, Group Head & CEO, SAP Media Worldwide Ltd. who set the tone by stating that in a competitive environment, the alcobev sector had to come up with bottling and packaging innovations for enhancing customer experience.

Abnormal increase in alcobev sales

Mr. Vinod Sharma said that in the last one and a half years, there has been an abnormal increase in alcohol sales and companies need to religiously work on cutting costs in a highly competitive world, without compromising on quality. The alcobev sector is banking on innovation of reducing weight of glass bottle while ensuring that it is not susceptible to breakages.

He mentioned that in the last two to three years there have been several innovations / techniques in bottling and packaging. One is the NNPB (Narrow neck press and blow) technique which can reduce weight of glass bottle up to 10 to 12%. However, over 90% of glass manufacturers in India have not adopted this technology due to initial investment costs. There is no substitute for glass bottle, particularly with premiumisation gaining currency, however glass manufacturers in India do not have adequate infrastructure to make bottles the way some foreign companies do.

Smart caps becoming smarter

The other areas the industry could look at includes smart caps with multiple options now with HDPE and metal combinations. “Smart cap is becoming smarter by the day.” Similarly, shipper cartons there are so many different varieties of material.

Sustainability should be key

Bhavya Desai nudged the panellists to talk about sustainability in packaging and Prof. K. Munshi, former IIT faculty, said while cost cutting is a factor by reducing bottle weight, making it compact etc., the sector should emphasise on value addition and how the consumer is benefitted. He gave a Japanese example where a manufacturer was dispensing Sake in small glasses which could be reused. “Sustainability also means next use of the product.” Most of the packaging is now thrown in to the garbage, he said and urged the industry to ‘put their minds together’ on sustainable packaging.

Innovation officers in companies

Prof. Munshi said presently the onus on cost reduction is on the bottle manufacturer which cannot happen due to reasons best known for the manufacturer. Hence, there is need for the alcobev sector to collaborate with the bottle supplier with regard to innovation. Companies should have innovation officer on board and whose full-time job has to be on innovation and value addition.

No alternative to glass bottles in premium segment

The professor underlined the importance of ‘thought process’ and research. “Whatever new technology comes in, one has to look at shapes, colours, aesthetics, the feel etc. how to get the maximum flavour, how to hold the bottle. These issues need to be looked into in a professional way. The user experience has to be factored in. You see many a time, empty bottles are kept as souvenirs. And as Indian companies we should think of what Indianness we can bring to the product through shapes, colours, culture etc. and how it complements with the bottle and the liquid within.” There is no alternative to glass bottles for premium category of alcobev as consumers do not prefer premium liquor in PET bottles.

Symbiotic relation between technology and design

While the big companies can bring in cost benefit partnering with the suppliers, the small players should leverage the flexibility they have by experimenting to the extent possible to offset costs. There is need for companies, irrespective of the size, to orient themselves to innovation and documenting it, even while adopting the best practices from around the world. Product development departments need boost. “Technology drives design. Development of technology takes a little longer, design is quicker but there is a symbiotic relationship between technology and design.”

Kaizen, continuous improvement to remove inefficiencies

Srinivas Mantri, Senior Manager, Beam Suntory India, talked about how the company came from a ‘Japanese thought process’ where continuous improvement or ‘Kaizen’ was in place. The idea is to keep removing the inefficiencies in the system. “Any innovation in our sector, it should factor in enhancement of customer experience and sustainability, giving back to the society, to nature.”

Beam Suntory is always working on these aspects, he said and mentioned that such processes had been implemented across different SKUs. “We have reduced the weight of the bottle, elevated the feel of the bottle, improved the label panels, reduced breakages.” Talking about glass bottles, he said, ‘see the liquid in the bottle, feel the bottle with hand and then taste the liquid… and also sound of the opening of closure…. consumer experience is involved and is demanding’. “The consumer wants something nice and something new.”

Bars display bottles, not mono cartons

He mentioned how in bars, one does not get to see mono cartons, but only bottles showing the liquid. Underlying the importance of thought process, Mantri said that from sourcing to the brand and to the consumer, there is an evolving journey, hence there is need to work with partners for continuous improvement. To engage the consumer, one needs to research who the consumer is and what we are giving to him or her, then comes tying up with internal and external partners. Importantly, consumer feedback has to be factored in and the entire process is on building the brand and consumer loyalty.

Anuj Bhargava, Managing Director, Kumar Labels, said there is a trend to remove mono cartons and when that happens, the focus is on the label on how it can be more attractive than the competition. Besides taste of the product, consumers pick the bottle for reasons such as the ‘look and feel’. Aesthetics is gaining considerable importance in this highly competitive market.

Experiential shopping: The rise of the flexible liquor consumer

Leave a reply

From local rice beer and wine to the more complex sura, through varieties like palm toddy and cashew feni, India has always had a rich culture of alcoholic beverages. While the fancy bottles now adorn bar tables and home refrigerators, it is important to point out that the industry is more diverse than that. India’s alcobev industry has grown tremendously in recent years to become one of the nation’s star sectors. As of 2020, the industry had a market size of $52.5 Billion, with a projected CAGR of 6.8%, according to ICRIER.

Specifically, India’s liquor subsector is currently undergoing a revolution, triggered, inspired, and sustained by a growing crop of evolving consumers. The culture of experiential liquor shopping has now found a foothold across the urban and suburban cities, where consumers are as interested in the experience of shopping as the product itself. There are several alco-bev companies that now offer such experiences, including liquor tours, tasting, and so on. From Hyderabad to Bangalore, Delhi to Mumbai, Guwahati, and across the other cities, there’s something exciting for every liquor lover.

Transforming the Indian liquor scene with game changing experiences

Why gamble with your liquor purchase when you can choose the brand you like after a round of tasting? In Bangalore’s Mansionz from the stables of Living Liquidz, is a one-of-a-kind experience. Mansionz is a premium brand that offers premium experiences to premium customers. It is a liquor store with a wine-tasting room that offers that up-beat luxury New York feel. So, you can get an elite experience and have a taste of their amazing liquors before making a purchase.

Beyond the tasting experience, Mansionz is also a platform for learning about different kinds of spirits and brews, towards enlightening consumers about tastes, styles, texture, and value. As Moksh Sani, Managing Director of Living Liquids says, the essence is to build a deeper understanding and greater appreciation within the consumers about the beverages available to them. “I am highly enthusiastic about wines and foods, and it is that same passion I intend to share with every customer that walks into Mansionz or has a taste of any of our 1,500 uniquely curated wines at the top floor,” he says.

Beyond the liquors and classic cocktails served to interested tasters, and the exciting assortment of rum, vodka, gin, single malts, beers, and cognacs, the brand has gone a step further with the introduction of a mobile app that allows users to sample at least three spirits based on a predefined sum. Mansionz is just one of the many liquor store brands that are doing amazing things in India. In fact, some like The Liquor Store in Mumbai houses some extremely rare collections including the Special Edition Louis XIII Cognac with a price tag of Rs 3,95,000, the 1800 Milenio Extra Anejo Tequila, and the Taiwanese hotshot Kavalan’s whiskeys.

These rare offerings stand in the midst of around 1,500 different types of wines, 1,000 spirits, 250 champagne brands, and at least 100 different beers from different parts of the world. With side attractions like The Tavern, a London-style restobar that hosts pairing sessions occasionally and bring alco-bev enthusiasts under one roof and the Lift & Learn feature in the Liquor Store which gives a shopper the opportunity to learn about the history, tasting notes, texture, and other details of the beverage through an AR technology.

In the words of Dinesh Kathuria, co-founder of The Liquor Store at Belapur’s Palm Beach Road, the surge in alco-bev demand during the pandemic called for innovative measures to draw in larger crowds and take advantage of new enthusiasts. “It’s increasingly becoming about the experience. People need to see that you’re invested in their feelings and comfort; that you care about them. This involves creating the right environment, and building stronger customer service. It’s all about the service,” he adds.

A rising preference for experience and consumer service

Think of a restaurant and how you’re waited on, attended to, pampered and offered a tour of their menu (if you like). That is what liquor stores are now trying to achieve with such experiential shopping. The importance of adding variety and lifestyle options to liquor stores is a testament to the growing need to not just attract, but also keep consumers by personalising their experiences.

Another major concern is the “taboo” that surrounds women walking into a liquor store. Finding a way around this is what Mayank Shroff, Vikash Musaddi, Anant Shroff, Anurag Murarka, and Vikas Murarka envisioned when they created Hedonne. The Kolkata-based premium shopping hub offers a superb experience, which the founders say is the goal, and not necessarily a transaction. This is a first-of-its-kind in eastern India, offering a delightful walk-in experience for patrons to explore its over 9,000 bottles of various alcoholic beverages. And what about the Alcopedia corner? That’s an innovation that leaves curious customers more enlightened than they were when they walked in.

According to team Hedonne, “Women now have a comfortable space to walk in, ask about alcoholic beverages and even shop for themselves and their partners without any judgement. They can also try out the drinks before making a purchase, a concept that is first-of-its-kind in the city. For us, it’s about making the customers love the experience of shopping from us and enjoying it.”

It’s the same goal for The Whiskey Company, an 8,900 sq ft enclave in Guwahati, the alco-bev capital of North-east India. The moment you walk into The Whiskey Company; you’re greeted by a W-SET-certified sommelier who introduces you to the finest liquors the industry can offer. The Cuban cigar lounge and soon-to-be open tasting room are other amazing features you’ll find. This place, like most innovative settings, operates an open-door policy for expression. “There are no taboos or judgments here. This is why we have more women coming here than any other place in North-east India. We’re also concerned about educating our patrons and expanding their palates,” says Vishal Deorah, the company’s Managing Director.

Hyderabad and Bengaluru are two other places where experiential liquor stores are opening up. In fact, Bengaluru made news when Tonique, a boutique liquor store set up what became Asia’s largest liquor store built on a 25,000 sq ft land. Owned by Anith Reddy, the brand now owns two showrooms between the two cities. A tour of the store showcases the best wines and champagnes from India, Australia, New Zealand, France, Italy, Japan, and several other parts of the world.

Building brand loyalty and long-lasting memories

These trail-blazing brands have offered another side to India’s growing alco-bev industry; one that shows that beyond the magic of the brewers and distillers, great customer service and experience are a no-brainer. Together, they have garnered a growing crop of patrons who understand the value of the moments that lead up to a purchase. It is hoped that this crucial aspect of the liquor industry will continue to expand and add a pleasant flavour to the industry’s value chain.

5 Women Bartenders who have made their mark

Leave a reply

Working in a bar is a great career option for anyone with a creative mind and a drive to learn. The preconceived notion that bartending is a man’s field has been thrown out of the window in the past decade, with women from different social, cultural and academic backgrounds having set the standard high in this industry, by leading some of the best bars, discovering and creating new drinks and whatnot. This International Women’s Day, we’re celebrating some of the top female mixologists from India, who despite the challenges, have broken barriers and showcased their excellent skills behind the bar.

Shatbhi Basu

An alumnus of IHM Mumbai, Shatbhi Basu went on to carve out an illustrious career in bartending and was awarded by the President of India and the Ministry of Women and Child Development as India’s first woman bartender. With an experience of over three decades, Shatbhi runs her own bartending academy in Mumbai called Stir Academy of Bartending. She conducts various workshops across the country and tries to keep this art alive among women. She also authored the first comprehensive guide to alcoholic beverages and cocktails relevant to Indian conditions called ‘The Can’t Go Wrong Book of Cocktails’, and has hosted and created India’s first TV show on cocktails & more – ‘In High Spirits’ on NDTV Good Times. Shatbhi was appointed the first American Whiskey Ambassador, India from 2013 – 2016.

Ami Shroff

Ami Shroff started her career in 2003 at the age of 18. Since then, she has never looked back. Today she is one of India’s few women flair bartenders who is sought after for special events and gigs. If that’s not enough, she is also an accomplished mixologist which makes her a complete professional at the bar. She has managed to perform at over 20 destinations across India and beyond the borders, at over 1000 events, from backyard pool parties to elite corporate functions and conferences. Ami also curates cocktail menus for some of the most acclaimed establishments and has starred in the Netflix documentary Midnight Asia, depicting the mixing of drinks into performing art.

Cindy Lalramngaihzuali

Cindy Lalramngaihzuali started her career in the F&B industry in 2015. After working in different departments, she got inspired after working behind the bar at Ek Bar in Delhi. Later, while doing a bartending course, she started working at Piso 16. After working for a month, she moved to Perch Wine and Coffee Bar, Delhi and takes care of Hoots’ cocktail bar there. One of her favourite cocktails is Hanky Panky – a spirit forward cocktail with gin, vermouth and Fernet Branca. Cindy considers her mother and grandmother as her biggest inspiration.

Sonam Rai

Hailing from a small town in Bihar and having no professional background in mixology, Sonam Rai is a hands-on and quick leaner of the craft. She credits he stint as an assistant bartender at GVK Lounge, Mumbai International Airport for her skills, where she picked up everything she knows from the Bar Manager Abhinay Patil. A big fan of dehydrated fruit garnishes and citrus drinks, try one of her grapefruit creations like the Bloody Habanero Margarita or Gin Grapefruit and Basil Ginger ale.

Arati Mestry

Arati Mestry’s journey towards being a bartender started with an impromptu cocktail competition in college and with a part-time job at a friend’s bar on weekends. After switching jobs, Arati took a small break to find a good workplace, and within some time landed a stint with BYG Brewski Brewing Co in Bangalore. She got her first job in the pre-opening team in Planet Hollywood Beach Resort, Goa, and then moved to Elephant & Co. Pune which, she considers, was a turning point. Currently she works with Seven Rivers Brewing Co, Taj Group, as a bar manager. Some of her accolades include being runner-up in the American Whiskey Legacy 2020, winner of the Jameson Barrelmen’ Face-Off 2018 (1st Edition), and national finalist in several competitions like the Campari Bartender Competition Asia 2019 – Top 5, the Monkey Shoulder Ultimate Bartender Championship 2019 – Top 5, and the Beluga Signature Bartender Program 2019 – Top 30.

Carlsberg Group appoints new Chief Executive Officer

Leave a reply

The Carlsberg Group recently announced that Jacob Aarup-Andersen will join Carlsberg as Chief Executive Officer, replacing Cees ’t Hart, who will retire by the end of Q3 2023 at the latest. His starting date will be announced later.

Jacob Aarup-Andersen, who is Danish, joins Carlsberg from ISS A/S, where he has served as CEO since 2020. ISS is a global leader in facility management with 360,000 employees operating in 60 countries globally. At ISS, Jacob has led a financial turnaround and the development of a strategy with a core focus on technology and digitisation, sustainability and diversity, equity and inclusion. During his tenure at ISS, the company has regained its growth momentum, with 2022 results above expectations. Prior to ISS, Jacob had senior leadership roles at Danske Bank and Danica Pension. Before that, Jacob worked as an investment professional in firms such as Danske Capital, TPX-Axon Capital, Montrica Investment Management and Goldman Sachs.

Chair of Carlsberg’s Supervisory Board Henrik Poulsen says, “As part of our ongoing succession planning, the Board has been through a comprehensive assessment of CEO candidates from around the world, with Jacob Aarup-Andersen emerging as the best candidate. Jacob is an outstanding CEO with a strong track record in delivering shareholder value and organic and inorganic growth in addition to driving the ESG and digitisation agendas.

“Jacob brings a unique blend of excellent strategic skills, financial acumen and discipline, global operational experience and an engaging and purpose-led leadership style. We’re pleased that he’ll be leading the next stage of Carlsberg’s value-creating growth journey, and we’re looking forward to welcoming him at Carlsberg.”

Jacob Aarup-Andersen says, “I’m really looking forward to joining Carlsberg, a truly iconic company. I’ve always admired the unique heritage and strong values of Carlsberg and look forward to building further on that great foundation. The Group’s strong international presence as well as its brand portfolio and ambitious ESG agenda, combined with the long-term mind-set and the values of giving back to society through the Carlsberg Foundation, are truly inspiring.

“I’m very impressed with the successful journey that Carlsberg has been on these past years. Cees and the leadership team have created a strong foundation, both financially and strategically, and I will continue the strong shareholder value focus. I’m looking forward to working with the team over the coming years to further accelerate the full growth and value creation of this unique company.”

Radico Khaitan to invest ₹900 crores in UP, makes commitment at Global Investors Meet

Leave a reply

• UP alcohol industry to get a boost with investments worth ₹16,392 crores

• Radico investing ₹650 crores in Sitapur 400KL grain distillery

At the recent Global Investors Meet in Lucknow, organised by the Uttar Pradesh government, Radico Khaitan, the fourth largest Indian liquor manufacturer, said it was committing investments worth ₹900 crores in UP, including the ₹650 crores in the new Sitapur 400KL grain distillery with an annual bottling capacity of 20 million cases.

Making a presentation on the opportunities for the liquor industry in UP, the Chief Operating Officer of Radico Khaitan, Mr. Amar Sinha said that the UP alcohol industry would get further boost as investments worth ₹16,392 crores would be made by different players. Radico is a major player in UP, contributing 24% (about ₹7,000 crores) of the state’s Excise revenue. Radico has Asia’s largest manufacturing plant in Rampur with three distilleries (molasses, grain and malt), Malt maturation facility and bottling lines, having invested about ₹1,500 crores. The Rampur plant recently converted its existing 140 KLPD molasses distillery into Dual Feed with an investment of ₹250 crores.

The Sitapur plant would generate 1000 direct and 2,000 indirect employments and contribute nearly ₹1,000 crores annually to the excise exchequer. The plant would manufacture IMFL, country liquor, ENA and Ethanol.

Giving an overview about Radico Khaitan which started in 1943, Mr. Sinha said that as one of the largest spirits manufacturer it was expanding capacity from 160 million litres to 327 million litres. It was strategically limiting interstate taxes and transport costs, having five own and 28 contract bottling units spread across the country. It was consistently increasing Prestige & Above brand contribution to total IMFL volumes; 53% in value terms. The gross revenue for FY 2022 was ₹12,470 crores with an EBITDA of ₹402 crores.

Radico Khaitan’s 8 PM has been the fastest growing whisky globally in 2022, being the 9th largest whisky globally by volume. Similarly, Magic Moments is the 12th largest vodka; Contessa, the 8th largest rum and Old Admiral, the 3rd largest brandy, all globally by volume.

UP volumes grown by 2.6 times

Mr. Sinha said with a progressive policy approach by the UP government, industry volumes had a compounded annual growth rate (CAGR) of 17% for Indian Made Liquor (IML) and 13% for Indian Made Foreign Liquor (IMFL). “Ever since the formation of the new government and policy, industry volumes have grown 2.6 times and we expect it to double in five years.” In 2016-17, UP distillery volume was 348.4 lakh cases of IML and 112.9 lakh cases of IMFL and the estimates for 2022-23 is 903.8 lakh cases of IML and 231.3 lakh cases of IMFL.

Highest excise revenue grosser

Citing figures, he said the excise duty collection had increased from ₹17,320 crores in 2017 to ₹40,400 crores in 2022-23 (estimated). Karnataka is a distant second at ₹24,580 crores. The UP revenue target for 2023-24 is ₹45,000 crores, having potential to touch ₹100,000 crores in five years.

To sustain this industry growth, an investment of ₹10,000 Cr has been made including an investment of ₹2,500 Cr in setting up grain capacity for potable liquor; molasses distilleries – ₹2,100 crores; bottling lines for country liquor ₹400 crores; present investment in IMFL (including ancillary industries) – ₹5,000 crores.

Mr. Sinha mentioned that UP was witnessing substantial flow of investments in the distillery sector with the Excise department having already got letters of intent worth ₹1,400 crores and signing 17 MoUs for setting up industries based on distillery, brewing and alcohol products. The state government has issued a mandate regarding approval of distilleries from different feeds such as molasses, grains, potatoes etc. and also eased rules for establishment of microbrewery in hotel bars. With a view to promote horticulture in the state, the government has exempted tax for five years for making fruit wine.

Simplified licensing process

The simplified licensing process, he said, was exemplary which many other states want to emulate. The ease of interaction with excise department has been transformational and like never experienced before in UP. Licenses are granted online in a timebound manner within 30 days after verification of all required KYC documents. The application is made online to the Commissioner of Excise through the concerned District Magistrate who then forwards his consent to Additional Chief Secretary (Excise & Sugar) and delivery of license is sent on WhatsApp besides online delivery. This process is applicable for all verticals like liquor, beer, winery, import and export permits.

Mr. Sinha mentioned that post 2017 (when Yogi Adityanath became the Chief Minister), the free market policy has been a game-changer. The government introduced a progressive excise policy, eliminated monopolistic nature of business and freed market at all levels of channels of distribution, starting from manufacturing to retail. While the consumer has a choice of brands, the industry has started expanding with a new level of confidence and exuberance.

Ethanol opportunity in UP

Delving on the ethanol opportunity in UP, Mr. Sinha said with ethanol blending target of 20% by 2025-26, there is a big opportunity for investment in grain distilleries for potable liquor and ethanol production. Giving an industry overview, he said the production of ethanol for blending with petrol was introduced in India in 2006-07 under the Ethanol Blending Programme (EBP). The initial target was blending of 5% ethanol with petrol by 2016-17 which got scaled to 10% by 2021-22 and revised to 20% by 2025-26. A 100 KLPD distillery would cost ₹120-130 crores (excluding land cost).

Ethanol production in August 2022 reached 327 crore litres and achieved blending ratio of 10.1% with UP contributed about 99 crore litres. The target is 1,016 crore litres by 2025 with sugar / molasses contributing 684 crore litres and grain 332 crore litres. Approximately 800-1000 crore litres of additional grain-based alcohol capacities are required by 2025 to meet the demand for 20% EBP and potable alcohol industry, thus opening up immense opportunities for grain distilleries in UP. The current India projects is 386 (molasses 263 and grain 123) and the capacity is 948 crore litres (molasses 619 and grain 329). The total UP projects is 85 (molasses 81 and grain 4) and the capacity is 209 crore litres (molasses 205 and grain 4).

Central Government initiatives

The Central Government has taken several initiatives for EBP and they include – Additional differential excise duty of ₹2 per litre on unblended fuel from October 2022; Financial assistance in the form of interest subvention @ 6% per annum or 50% of the rate of interest, whichever is lower for five years including one-year moratorium; Fixing remunerative prices of ethanol produced from different feed-stocks for the supply of ethanol to Oil Marketing Companies (OMCs); Reduced GST on ethanol meant for EBP programme from 18% to 5%; FCI rice and maize also allowed as feedstock; Environmental Clearance procedures simplified by the Ministry of Environment; Enhancement of storage capacities to store ethanol started by OMCs; Use of automotive fuel E12 (12% ethanol with 88% petrol) and E15 notified; Flexi-fuel engine and components (capable of running up to E85 fuel) included under PLI scheme; and Amendments to the National Policy on Biofuels to make India energy independent by 2047. The total requirement for 20% blending and other uses is 1,750 crore litres of alcohol (650 crore litres from sugar sector and 1,100 crore litres from grain-based distilleries) by 2025.

Liquor consumption to rise manifold in India in 5 years

Mr. Sinha said liquor consumption in India is set to rise manifold in the next 5-years and cited Boston Consulting Group (BCG) report which mentions increase 3.5 times from ₹31 trillion (3.1 Lakh Crore) to ₹110 trillion (110 Lakh Crore) over the decade ending 2018 of domestic liquor consumption. The report estimates consumption in India to touch ₹335 trillion (335 Lakh Crore) by 2028, exhibiting a CAGR of 13.2%, from its 2018 level.

UP is the second largest producer of sugarcane in India with molasses as the by-product for the alcohol industry. With 23.1 lakh hectares under cultivation, the state advisory price is above the fair and remunerative price of the centre. It is pegged at ₹340 per quintal as against ₹280-310 in South. The output value of sugarcane grew 43.9% from ₹24,860 crore to ₹35,770 crore over the decade ending 2022.

UP driven to achieve $1 trillion economy

Giving an overall view of the UP economy, he said the government is driven to achieve $1 trillion economy goal by 2027. The state scored high on Law & Order; Infrastructure & Connectivity; Power; Work Force; Raw material; and lesser political intervention. UP’s contribution to Indian economy as GSDP India: 100, UP 8; GSDP growth rate: 11.5 %, UP 8.43%; Per capita GSDP (US$) – India: 2,092 | Uttar Pradesh: 1,016; Cumulative FDI inflow (from Oct 2019-Jun 2022) (US$ million) – India: 158,879 | Uttar Pradesh: 995.

Mr. Sinha cited that the Chief Minister’s vision was laudable and that according to the Mood of the Nation survey, conducted by India Today & C Voters, 39.1% of respondents consider CM Yogi Adityanath as the best performing chief minister in the country. The survey was conducted in 30 states, thus making a case for UP as the best investment destination.

Whisky industry calls on Chancellor to fulfil Manifesto Pledge to Scotch

Leave a reply

The Scotch Whisky Association (SWA) which conducted a poll shows that a third of the voters are less likely to support the Conservatives if the Chancellor, Jeremy Hunt increases duty, while 72% support a freeze on Scotch whisky tax in the Spring budget.

Jeremy Hunt has been urged to freeze duty to fulfil the pledge made in 2019 to “ensure our tax system is supporting Scottish whisky”. The Chancellor will use his Budget to finalise a long-awaited review of the duty system, but reports suggest whisky drinkers and producers will get nothing – and even see tax rates increase.

Per unit of alcohol, duty paid on spirits is already significantly higher than the European average, with around £3 in every £4 spent on a bottle of Scotch whisky going to the treasury as tax. A further increase to spirits duty in the budget would further add to the cost of living and fuel inflation – which the UK government has pledged to halve this year.

The poll, conducted by Survation, also shows Scotch Whisky’s crucial role in supporting the wider supply chain, with 76% believing support for the Scotch Whisky industry will boost hospitality businesses. Spirits like Scotch whisky account for 34% of sales in the UK on-trade, but 99% of distillers do not have access to proposed tax breaks in pubs and bars, known as “draught relief”.

The Scotch whisky industry already contributes more than £5.5bn to the UK economy every year. The sector supports more than 42,000 UK jobs, employing 11,000 people directly, the majority of whom are in rural communities of Scotland. More than 90% of all UK spirits production is based in Scotland, and the SWA has argued that any increase to spirits duty would put Scotch whisky distillers at a further competitive disadvantage and disproportionately impact business north of the border.

Commenting on the results of the poll, Mark Kent, Chief Executive of the Scotch Whisky Association, said, “Distillers across Scotland are waiting for the pledge made in 2019 to be fulfilled. There has been a review of alcohol taxation, but still Scotch whisky is taxed more than beer, wine or cider and 99% of distillers do not have access to tax breaks available to sales in the on-trade. The competitive disadvantage faced by the industry could get worse if the Chancellor further raises tax on Scotch whisky and other spirits in the Budget this week. We urge him to listen to people across Scotland, make good on the commitment to support Scotch Whisky, and freeze duty.”

Liquor and duty free sales look upbeat as the Covid threat recedes

Leave a reply

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.

‘The Youth will be finished’

Leave a reply

Supreme Court on illicit liquor related deaths

• Spurious liquor claims over 50 lives in Bihar

• Bihar Chief Minister says no compensation to families of victims

• Supreme Court pulls up Punjab Government for illicit liquor trade

Illicit liquor deaths in India are not uncommon. The 50 plus deaths in Bihar due to consumption of spurious liquor has sparked off a debate on prohibition too, vigilance, affordability etc. The stance taken by the Bihar Chief Minister, Nitish Kumar that ‘jo piyega, woh marega’ has been criticised by the opposition saying that instead of cracking down heavily on those manufacturing spurious liquor, the Chief Minister is taking a high moral stance.

Not just the youth will be finished, but all those who consume illicit liquor will end up in a mess. Even while the Supreme Court made the remark recently on the flourishing illicit liquor trade in Punjab, in Bihar, where prohibition is in place, the death toll due to consumption of illicit liquor had crossed 50 at the time of writing. The deaths were reported from Saran district.

The Chief Minister of Bihar, Nitish Kumar is obstinate about continuing prohibition, despite the frequency of deaths due to illicit liquor. He said in Hindi ‘Jo piyega, woh marega’ (one who drinks, will die) and added that prohibition had helped so many families. The Chief Minister categorically stated that no compensation would be paid to the families of those who had died in the liquor tragedy.

To boot Bihar has a Minister for Prohibition and Excise, Sunil Kumar who dismissed the tragedy, stating that “Rumours are being spread by some political parties or people with vested personal or political interest that hooch tragedies are happening in the state because of prohibition. We want to clarify that hooch incidents have no relation with the ban on liquor.”

Sunil Kumar, Minister for Prohibition and Excise

The Chief Minister said, “Even when there was no liquor ban here, people died due to spurious liquor – even in other states. People should be alert. As there is a liquor ban here, something spurious will be sold due to which people die. Liquor is bad and shouldn’t be consumed.”

Prohibition gives room for illicit trade

Deaths due to consumption of illicit liquor is a common phenomenon in Bihar and elsewhere too, but the governments are turning a blind eye to the situation. Earlier in March this year, 42 persons died and in 2021 the number of deaths reported due to illicit liquor consumption was 95 in Bihar. It was in 2016, Nitish Kumar who has been Chief Minister for seven times, introduced prohibition, taking a high moral ground and termed all those who drink as ‘mahapaapis’ (great sinners) and ‘not Hindustani’ which as head of state did not augur well for a trade which, besides adding to most State coffers, has evolved itself with great responsibility and sophistication. Yes, there are black sheep that run the illicit trade, which can be weeded out jointly by the industry and regulators.

The tragedy has led to war of words and the opposition, particularly BJP, has got a handle to drub the government on how prohibition has not only failed, but also led to rise in illicit liquor trade. The Union Minister for Panchayati Raj Giriraj Singh has urged Nitish Kumar to reconsider the prohibition policy, claiming that it has failed in checking illegal sale of spurious liquor, resulting in frequent deaths, and a rise in crime linked to it.

Last year alone from January 2021 to October 2021, the Bihar government registered a total of 49,900 cases in different districts after conducting special raids under the State Prohibition and Excise (Amendment) Act-2018. It seized a total of 38,72,645 litres of illicit liquor. The Bihar Police in an official statement had mentioned that a total of 12,93,229 litres of country liquor and 25,79,415 litres of foreign liquor was recovered and confiscated in the state.

During the operation, 62,140 accused were arrested and 12,200 vehicles were confiscated. Of the total accused, 1,590 people arrested did not belong to the state. The five districts, which were on top in terms of liquor seizure were Vaishali with 45,63,59 litres of liquor, Patna with 35,00,85 litres, Muzaffarpur with 25,64,80 litres, Aurangabad with 23,25,42 litres and Madhubani with 22,37,67 litres. The five districts, which were on top in terms of arrests are Patna with 6855 arrests, followed by Saran (3872), Motihari (2832), Nawada (2814) and Muzaffarpur (2660). With mounting opposition, the Bihar Chief Minister has asked his officials to arrest the ‘big fish’ involved in manufacture of spurious liquor.

Nearly 4 lakh violators languishing in jails

As per media reports from Bihar, nearly 4 lakh people have been arrested under the prohibition law since April 2016, leading to crowded jails and courts which are stressed dealing with such cases. Most of those arrested are poor, unable to afford bail. Despite this, the illicit trade keeps attracting people into the network of clandestine trade.

With so many arrests and many of them languishing jails, while the big fish go scot-free, the Nitish Kumar government has proposed amendment to the Bihar Prohibition and Excise Act, 2016. The proposal is to give a ‘second chance’ to violators rather than punishing them straightaway.

Illegal ‘bhattis’ keep mushrooming

Bihar, Gujarat, Mizoram and Nagaland are the states where prohibition is in force and deaths due to illicit liquor consumption is not surprising. And Punjab where liquor consumption is high, illicit liquor trade is thriving and the Supreme Court recently castigated the government on how such trade was destroying the social fabric. A bench of justices M R Shah and C T Ravikumar asked the Punjab government to spell out specific steps taken to curb the production and sale of illegal liquor. Senior advocate Ajit Kumar Sinha, appearing for the Punjab government, assured the court that the state is taking action and had already destroyed over 13,000 illegal liquor ‘bhattis’ (distilleries).

“We are not concerned with A government or B government. So far as Punjab is concerned, the drugs problem is increasing. The youth will be finished. It is very unfortunate that this is happening. Who is the sufferer? The poor people. Illegal manufacture and transportation have to stop because it ultimately affects the health and the society,” the court observed.

36,000 FIRs registered in Punjab in two years

The top court was hearing a plea arising out of a September 2020 order of the Punjab and Haryana High Court that had disposed of a petition seeking transfer of some FIRs registered in Punjab in relation to distillation of spurious liquor, its sale and inter-state smuggling to the CBI. Sinha told the Supreme Court that over 36,000 FIRs had been registered in the last two years.

The bench pulled up the defence counsel stating “You (government) are only filing FIRs, but according to you in every gali and mohalla there is a ‘bhatti’.” “The state may also come out with a circular on effective investigation and enquiry…. that if any illegal bhatti is found, the concerned local police will be held responsible for not keeping a vigil,” the bench said. The apex court, which observed the poor were the worst sufferers of hooch tragedies, directed the Punjab Excise Department to apprise it about the particulars of certain FIRs that have been lodged.

The Punjab government’s excise department has filed an affidavit in the Supreme Court that it would introduce country liquor with an alcohol content of 40% as a ‘healthier alternative’ to illegally home-brewed liquor and spurious liquor. The Punjab government also told the court that an officer of the rank of Inspector General of Police would be deputed to investigate and monitor all cases registered under the Punjab Excise Act, 1914 and that circulars had been issued to all field units to ensure action against illegal liquor production and smuggling.

The petitioners had claimed in the high court that illegal distilleries and bottling plants mushroomed in the state where the liquor mafia continues to thrive. They also referred to the August 2020 hooch tragedy in Punjab where over 100 people had died owing to consumption of spurious liquor. There are hundreds of varieties of spurious liquor and they are sold under different names such as ‘Mahua’, ‘Narangi’, ‘Moonshine’, ‘Tarra’ etc. Most ‘bhattis’ make hooch using coarse Jaggery, local yeast extracted from plants, citrus peels from oranges, sweet lime, etc., and other fruits like wild berries, pears, apricot, peaches, water, methanol etc. are used. Further, it is reported that they add organic waste, dead rodents, lizards and battery acid to make it more potent.

782 deaths in India in 2021

Last year, India registered a total of 708 incidents of consumption of illicit/spurious liquor causing 782 deaths. The maximum such deaths were reported from Uttar Pradesh (137), followed by Punjab (127); Madhya Pradesh (108) and Karnataka (104). The problem is more of spurious liquor. However, industry experts believe that prohibition aids illicit liquor trade, but add that unless governments deal with a firm hand such trade, deaths are going to continue, prohibition or no prohibition. The contention of the industry is that by lifting prohibition, consumers are spoilt for choice and that in a way can bring down casualties.

Illicit liquor trade is big not just in India, but in many countries due to the moolah it brings in for those indulging in it. As per a report, the ASEAN countries are forecast to have the highest consumption of unrecorded alcohol by 2025. “Illicit alcohol accounts for 90% of the alcohol market in Indonesia and 85% of the market in Vietnam.

– R. Chandrakanth

UK wants to say Cheers with Scotch despite tariffs

Leave a reply

In a recent visit to India, UK Ex-Prime Minister Boris Johnson decided to push for a Free Trade Agreement. The idea was to have fewer trade barriers between the two countries. In other words, an agreement that would help both countries ship products and services without excessive taxes.

For the UK Scotch whisky is the elixir perhaps because of Brexit. UK voted to leave the European Union and perhaps what went unnoticed was third of the country’s whisky exports - £1.3 billion ($1.65 billion) worth actually, went to EU countries. Post-Brexit however, that isn’t the case. The move has cost the scotch whiskey industry £5 million ($6.3 million) every week. And now they’re being forced to work with every EU country independently. They have to deal with different shipping norms, separate customs requirements and a whole host of packaging regulations.

It turns out that all these issues have prompted the UK to think differently and find newer markets. First, they targetted Australia and struck a deal — to remove a 5% tariff on scotch whisky. Elsewhere the UK managed to obtain the coveted “protected status” for its whisky by inking separate deals with Japan, Norway, Iceland and Liechtenstein. This will protect their scotch whisky from imitation, misuse, or any other forms of intellectual abuse.

And the focus shifted to India, a country that consumes more whiskey than any other country in the world. One in every two bottles of whiskey is now sold in India and the UK wants to make up for the loss in sales in the European Union by growing its market in India.

The UK allows ALL imports of Alcoholic Beverages into the country to be taxed to NIL customs duty and this is not just from India, it’s from 70+ other countries, that supply AlcoBev to the UK. Similarly, the conditions about a minimum three-year maturity, type of substrate used, the absence of additives, etc. are all equally applicable to Whiskies from all supplying countries, including the UK. So, there are no India-specific barriers that some players are seeking removal of. On the other hand, India imposes customs duty of 150% on all imports of Alcoholic Spirits, from all countries including the UK (which has the largest share of such imports), says I P Suresh Menon, Secretary General, ISWAI (International Spirits and Wine Association of India).

But the whiskey definitely dominates the Indian market, almost contributing 60% of sales to the IMFL (Indian Made Foreign Liquor) segment. But if you’re a person who enjoys a glass every now and then, you’d know there’s a difference between Indian whiskey and Scotch whisky.

Scotch whiskey is typically of Scottish origin and made from grains - primarily barley. On the other hand, IMFL is made from molasses, a by-product of sugar production and grains. It is much cheaper. So in some ways, IMFL liquor outsells its foreign counterpart in a massive way. But there’s another roadblock for foreign manufacturers - Taxes! See, taxing liquor is a wonderful source of revenue for the Indian government. For instance, five southern states namely Andhra Pradesh, Telangana, Tamil Nadu, Karnataka, and Kerala generate 10% of their revenues from taxes on liquor sales alone. And you can see why they want to impose even higher taxes on imported liquor. In fact, import duties can go as high as 150% in some cases. And that means, even though Scotch Whisky imports in the country have risen 200% in the past decade, it still only commands a tiny 2% market share in the Indian markets.

Now imagine if the tariffs were removed completely. What would that mean for the UK and Scotch Whisky industry. Well market sources contend that the market share could reach as high as 6%.

And so you can see why this makes total sense for whiskey manufacturers in the UK. But do Indians benefit in any way?

Well, for starters Scotch Whisky will likely become more affordable and more Indian whisky producers will use more Scotch in their IMFL and will premiumise their brands to an extent that the difference between Scotch and IMFL would not be much different. So it will mean that Indian consumers will get a product as good as Scotch at a favourable price. But cutting importing duties could also bump up revenues for the government. For instance, last year, the Maharashtra government slashed excise duty by 50% on imported liquor. And it now expects revenue to rise by ₹150 crores — from the sale of imported scotch annually.

And finally, with over 19 million new consumers coming of “legal drinking age” each year, India is definitely a market that liquor makers would like to tap into. Guess it will be a win-win situation for consumers. The Indian government may be tempted to go ahead with deal as the possibility of revenues rising in a sustainable manner is a good possibility.

According to Director General of the Confederation of Indian Alcoholic Beverage Companies (CIABC apex body for domestic liquor firms), Vinod Giri, this FTA also holds significant importance for India in the scope of future trade with the United Kingdom as trade competitors like Bangladesh, Sri Lanka, and Pakistan enjoy duty-free merits under the UK’s generalised scheme of preferences. Indian liquor producers are keen to enjoy newer markets for their products in the United Kingdom but are hindered by the stipulation that whiskey exported to the Brits should be Grain based and aged for three years. At the same time, liquor produced in India is not aged.

Refined Oil (9.7% of all UK goods imported from India)
Clothing (9.6%)
Medical and pharmaceutical Products (5.6 %)
Miscellaneous Metal Manufactures (5.1%)
Textile Fabrics (5.0%)

All these products were the primary imports to India from the United Kingdom, but as the pact stands on the brink of either collapse or being executed after several reconsiderations. A recent list had brought forward 240 odd items which would face trade duty deductions once the agreement is executed. From this pool of 240 things, a few that stand out are whisky, cars, vaccines, basmati rice, wool, and tea premix. As of now, no indication has been released about the possible way out of the situation, but in the coming future, it’s possible that the pact might be passed with several reconsiderations and follow-up procedures. Currently, diplomatic negotiations of the highest level are going on between the countries.

Amid reports of the UK seeking massive tariff concessions on imports of scotch whiskey during ongoing free trade agreement (FTA) negotiations, liquor sector association Confederation of Indian Alcoholic Beverage Companies (CIABC) has written to the government strongly objecting to any plans to slash Basic Customs Duty (BCD).

A reduction in BCD, it said, will adversely affect Indian Made Foreign Liquor (IMFL) brands since imports already dominate the Indian alcoholic beverages market. CIABC has been part of several recent meetings hosted by the Ministry of Commerce with stakeholders before the trade talks with the UK.

“India exports just ₹5 crore worth of alcoholic beverages annually to the UK against an import of ₹1,300 crores. Exports to the UK constitute only 0.2% of India’s total exports of alcoholic beverages whereas imports from the UK are 24% of India’s total import of alcoholic beverages,” said Vinod Giri, DG, CIABC.

Giri further noted that “restrictive” trade policies are also hampering the growth of Indian exports. “While the export of alcoholic beverages from India stood at 7.3 million cases (9 litre each) in the year 2019-20, exports to the entire EU (including the UK) were less than 30,000 cases which consisted of Indian super premium malt whiskies,” he pointed out.

CIABC said that the United Kingdom should also remove restrictions such as a minimum three years’ maturation period for whiskey and rum, since it has been scientifically established that in warm Indian conditions, spirit ages 3-3.5 times faster than in the UK. Giri added that a BCD cut would skew the balance of trade.

A notion worth dispelling is that Scotch whiskies are costlier to produce; it is 50% more expensive to produce it in India than in Scotland.

In wake of the Indo-UK trade discussions, many ‘experts’ argue for reduction in tariff, particularly slashing custom tariffs on imported Scotch and on ‘Intermediate’ products which they say are nothing but high-strength, potable, undenatured ethyl alcohol used for bottling and blending in India.

They argue on three main grounds. One, that India has a large trade surplus in the category and can afford greater imports; two, customs duty reduction on intermediate products will encourage ‘Make in India’; and three, even if tariff is reduced the bulk of consumption will remain locally produced whiskies — so why bother.

This industry contributes nearly ₹250,000 crore in taxes and for most states it constitutes 15-30% of revenue. Customs duty is not even ₹5000 crore in comparison. Second, this industry uses agricultural products as primary raw material and nearly 50 lakh farmers depend on it. It provides employment to 20 lakh people. Any disruption will have widespread ramifications for the government, farmers and labour market.

The problem with the first argument is that it hides the true balance of trade on alcoholic beverages using a wider head of ‘Food and Drinks’. If one separates alcoholic beverages/products for human consumption from the wider clubbing of ‘Food and Drinks’, a very different picture emerges.

As per DGFT data for 2018-19, India exports only ₹5 crore worth of alcoholic products/beverages to the UK, against import of ₹1300 crore. Clubbing alcohol under a much bigger ‘Food & Drink’ category to claim favourable balance of trade is highly misleading.

The second argument is also a misconception. Scotch Whisky goes through two major stages of productions — distillation and bottling. The ‘Intermediate’ Scotch whisky is actually the output of the first stage, it has been produced and matured in Scotland. What happens in India is only bottling. Therefore, while incentivising intermediate products through reduced or zero duty will lead to an increase of usage of bottling plants in India, which will be a big loss for Indian farmers and manufacturers.

The third argument misses out on three vital points. One, in product categories with multiple price segments like whisky, consumers seamlessly shift to the next category up or down depending on affordability.

So, when a Scotch whisky is sold at a lower price it takes away consumers from products in the price segment, starting a domino effect that makes the domestic industry the net loser. Two, introduction of Scotch whisky at lower price attacks the profit driving end of portfolio of Indian companies, thus jeopardising their viability. Third, Indian premium whiskies like Amrut, Paul John or Rampur are now regarded amongst the best in the world but are unable to make the same headway in the domestic market due to an unsupportive regime and reducing customs duty further just will not help.

Another notion worth dispelling is that Scotch whiskies are costlier to produce. Rather, it costs at least 50% more to produce a whisky of similar quality in India than in Scotland. This is primarily on account of a higher cost of capital and higher taxes in India, interstate restrictions and higher evaporation losses.

Also, many states offer concessionary taxes on imported products, but reduction in customs tariffs cannot be done without removing compensatory state-based concessions as otherwise it will create a hugely discriminatory tax regime against Indian products.

If we talk about reciprocal duty concessions, the problem is that barriers put up by the UK are not tariff based but non-tariff ones. India, being a sugar producing country, has evolved whisky recipes based on spirit distilled from molasses. The UK does not accept this as it is not “recipe standards”. The result of these non-tariff barriers is that of the 70 lakh cases of whisky exported from India every year, the whole of the EU including the UK accounts for less than 30,000!

Indian industry is not against reducing customs duty on alcohol, but it should be in a phased manner and up to a point where it creates a level playing field.

Accordingly, it has put forward its recommendation to reduce import taxes, aggregate of customs duty and AIDC, from 150% to 100% now and to 75% in five years’ time. It has also recommended a threshold import price for taxation at $5 per bottle, and reciprocal concessions from the UK allowing whiskies from India to be allowed in the UK market as ‘Indian Whisky’ without minimum maturity conditions.

30 Best Bars India announces new category – Best Sustainable Bar

Leave a reply

A jury of over 50 industry professionals and bar enthusiasts from across the country are currently at work to create the long list of Top 100 Bars for 2022. Starting early November, a larger pool of more than 200 jurors will vote to rank the country’s 30 Best Bars, and also pick winners in 10 jury-nominated categories including Best Hotel Bar, Best Restaurant Bar, Best Independent Bar, Best Cocktail Menu, Best Bar Team, Best Bartender, etc.

The 2022 Jury Chairs for the 30 Best Bars ranking across various cities include names like Sanjay Ghosh (YouTuber and Director, Cocktails India), Rohan Carvalho (Founder and Partner, Bar Square India), Harinath Shanker (Director, Bar Masons), Puru (Drinks Enthusiast), Shatbhi Basu (Author, Managing Director & Owner, STIR Academy), Shreya Soni (Founder and CEO, DSSC), Minoti Makim (CEO, Carpe Diem), Karthik Setty (Founder of Hyderabad Thirst Club), Kimberley Pereira (Marketing Director at Kade Communications), Nolan Mascarenhas (Photojournalist, UpperCrust), Vaniitha Jain (Founder, The Perfect Pour) and Karina Aggarwal (VP, India Craft Spirits Co).

Incredible resurgence of bars

Speaking on the occasion, Vikram Achanta, Co-Founder of 30 Best Bars India, said, “India’s bar industry has been remarkably resilient over the past two years, and we are now witnessing an incredible resurgence – as new ventures are transforming the bar scene every day. We are incredibly excited to open applications for our third edition, with a new award category introduced to applaud sustainability innovations. We look forward to working with leading alcobev industry members to unveil our 2022 rankings.”

This year the Best Bar Design Award, which commends bars that set new standards of excellence in design, interiors, and bar ergonomics will be voted on by experts of the bar design industry. Bar owners who feel they may have been missed out from being included in the 30 Best Bars India long list can self-nominate themselves on https://www.30bestbarsindia.in/enroll-your-bar/, with required information and photographs.

“When we started, we wanted to honour the country’s best bars and bartending talent. Today, 30 Best Bars India is on every bar’s radar, and they are constantly upping their game to be featured on our Top 100 and Top 30 lists. With our masterclasses, workshops, and cocktail carnivals, we are rapidly shaping India’s cocktail culture, and aim to be the go-to list for consumers to find the best watering holes in their cities,” added Radhakrishnan Nair, Co-Founder of 30 Best Bars India.

Prior to the finale, 30 Best Bars India will also host immersive Masterclasses for the bartending community, cocktail workshops by renowned mixologists, and first-of-its-kind cocktail carnivals with specially curated cocktail menus from the world’s best brands across India.

Co-founded in 2019 by Vikram Achanta and Radhakrishnan Nair of Bar 30 India LLP, 30 Best Bars India aims to raise awareness about the rising standards of Indian bars and beverages nationally, and on international platforms. 30 Best Bars India ranking of the country’s best bars in the previous two editions in 2019 and 2021 have included well known bars that have gone on to be part of international bar ranking lists over the last three years. To see the full list of bars and their rankings in 2019 and 2021 please visit: https://www.30bestbarsindia.in/.

Raising the bar, indeed

Indian bars are stoked that some of them are making it in international rankings, something to cheer about. Some of the Indian cities have a vibrant cocktail culture, but never did they vie for international recognition. There are a couple of reasons for this trend, the first being those founding these heady bars are young, spirited, innovative and above all daring to dream. They are certainly raising the bar. Then there is the customer who is sipping his or her drink with finesse, with a lot of understanding and responsibly. The well-heeled traveller is one of the profiles of the customer, but then the internet of things, so to say, has given birth to a new breed of connoisseurs.

And when Delhi’s chic bar – Sidecar makes its entry into the World’s Best Bars with a ranking of 26, it certainly warms the cockles of one’s heart. Goa’s go to bar Tesouro which opened during the pandemic has just sneaked into the top 100 with a ranking of 99 in 2021.

In Asia’s Best Bars, Tesouro has taken the fourth place. The capital has three ranks in Sidecar – 14th; Hoot – 26th; Home – 30; and Bengaluru’s Copitas is at 44. And the industry believes that the number is going to swell.

Tesouro makes a splash

Tesouro, meaning treasure in Portuguese is a treasure trove in the coastal state of Goa which prides itself of the local brew – Feni. Tesouro in South Goa is a cool bar with Goan-Portuguese design elements and a very impressive bar and bar tending aficionados. The cocktail menu is a showcase of the bar team’s creativity with drinks such as Midnight Brekkie (gin, bianco vermouth, peanut butter, watermelon, strawberry) topping the ranks as the most popular drink. Tesouro certainly has made a splash as a new entrant in the international bar scene.

Sidecar – Racing away to glory

Delhi’s Sidecar has been winning accolades, thanks to the bar legend Yangdup Lama and business partner Minakshi Singh. The duo has positioned Sidecar as a ‘friendly neighbourhood bar’ in a happening place of Greater Kailash. The signature cocktails are something to toast too and Rohan Matmary has dished out amazing iterations of their namesake – the Sidecar.

Hoots – One might as well say ‘I care two Hoots!!’

Ranked 26, Hoots which is tucked away in Vasant Vihar in New Delhi is kind of pivot in the capital’s cocktail scene, kind of a pioneer having introduced a world-class cocktail programme, attracting the globe trotter and haute monde and who know what a fine cocktail is.

Home – Is where the spirit is

Ranked 30th, Home was previously a member’s club and only recently it opened its doors to the public at large who seem to be heading home, just by the whiff of it. The bar reminds one of a Parisian jazz clubs, but some of the offerings have a local flavour to it, making it a perfect fusion. Like a typical home, one can nurse one’s drink with a book in hand or just enjoy the music which wafts through without being loud.

Copitas gives a different flavour to Pub City

It is said to be Bengaluru’s watering holes, besides the many places such as Toit, Byg Brewsky etc. which have elevated the IT city to another level. Copitas is located on the 21st floor of the Four Seasons hotel and come rain or shine, the well-stocked bar leaves one tingling for more. Looking down at the city from that level has got more to do with the bartenders’ artistry than the city lights.

The cocktail culture is fast evolving in not just the Indian metros, but other cities and towns too. Yes, albeit a bit late on the international scene, but sure enough the bars are making waves.