Tag Archives: alcohol

Opportunities for beer in 2021 & beyond

Beer suffered quite heavily during 2020, primarily due to its reliance on the on-premise. Beer markets in Italy, the UK and Colombia were amongst those particularly hard hit due to lockdown restrictions. Traditional inbound tourism hubs continue to hurt. Some brewers also faced legislative issues, notably full bans on the sale of alcohol in South Africa and India, and a ban on domestic brewing in Mexico. Changes in consumer purchasing behaviour in the off-premise, such as a tendency to purchase multi-packs and less time spent browsing, meant some players had to adapt to new packaging offerings and/or new distribution channels as well. Overall, the industry will likely see an approximate 9% decline in beer consumption across 19 key markets (2019 to 2020). Amidst the challenges, however, there are bright spots:

Market recovery

IWSR research shows that some beer markets will emerge from 2020 relatively unscathed: beer proved remarkably resilient in Japan, for example, especially in the face of a strongly-advancing ready-to-drink (RTD) category. Although beer in China will see an approximately 7% loss in volume in 2020, the decline is not as bad as many feared it could be, primarily as restrictions had largely been lifted by the key summer months. Looking forward, developing markets will continue to provide growth opportunities for brewers. Even before Covid-19, many developed beer markets had stagnated in recent years. Key players have invested heavily in increasing their brewing capability and distribution networks across developing markets. Africa has been a particular focal point for investment, with new breweries opened in countries including Mozambique, Kenya and Ethiopia. In Asia, Heineken and Carlsberg have been very active in Vietnam and Cambodia. In 2019, Heineken enjoyed success with the launch of Heineken Silver in Vietnam, while Carlsberg’s relaunch of Huda was also well received. Of the leading markets, IWSR projects these two countries to be in the top ten growth markets between 2019 and 2024. The potential for beer growth in India is strong as well. AB InBev, for example, began brewing Budweiser in the market back in 2010. In January 2021, Kirin Holdings announced an investment of $30 million in New Delhi-based B9 Beverages, the maker of the Indian craft beer Bira. IWSR anticipates beer consumption in India to return to pre-Covid-19 levels by the end of 2023, continuing on its growth path from there.

Expanding beyond beer

As consumers moved to the at-home occasion, the trend for convenience has helped to shape purchasing behaviours. In markets such as the US, the ready-to-drink (RTD) category, which includes hard seltzers, has been taking share from beer. RTDs provide a growing opportunity for brewers to diversify their product portfolios. Indeed, Heineken entered the hard seltzer category in September 2020, with the launch of Pure Piraña in Mexico and New Zealand. In the US, Heineken partnered with AriZona to launch the AriZona SunRise Hard Seltzer in October 2020. AB InBev states that Bud Light Seltzer is their leading innovation in the US market, with over 75% of volume being incremental to their portfolio. In fact, 2021 was the first year in which a hard seltzer commercial (Bud Light Seltzer) aired during the Super Bowl. Malt-based RTDs are currently dominant in the US owing to their taxation base, and brewers there are in prime position to take advantage. Elsewhere, the alcohol base of choice varies by country, driven by consumer preference and local alcohol tax structures.

Changes in purchasing behaviour propel e-commerce

As with the wider beverage alcohol industry, Covid-19 has propelled the value of the alcohol e-commerce channel. Heineken, for example, reported that Beerwulf, its direct-to-consumer platform in Europe, nearly doubled its revenues in 2020, while in the UK, its revenues tripled. Online sales of its home-draught systems grew as well. Beer has traditionally under-traded online, primarily due to the channel offering lower margins. However, this will change as consumers continue to buy more groceries online and beer is included in the weekly shop. This is especially true in the US, where IWSR expects sales of online beer to grow rapidly as supermarket chains increasingly invest in the channel. Online beer sales hold the greatest market share in countries including Japan, the UK and the US. From a lower base, online beer sales will also grow rapidly over the next five years in markets such as Israel and Nigeria.

The entrepreneurial spirit of small-batch players

Craft breweries, which tend to be more dependent on the on-premise, have propelled interest in the global beer category and revitalised its fortunes in many markets. IWSR believes that the entrepreneurial spirit of the sector will mean that craft brewery regeneration will be quick. In the US, for example, IWSR has seen the pandemic lead to a “buy local” approach amongst some consumers, which will benefit small-batch players.

Innovation in the no/low space reignites the category

No- and low-alcohol beer is a bright spot for the category, as moderation and wellness trends continue to resonate with consumers. IWSR data shows that, to date, most volume has come from no-alcohol rather than low-alcohol beer across 10 key markets. Broadly, low-alcohol beer is giving way to no-alcohol offerings particularly in markets such as Australia, France and the UK. Spain, for example, is seeing a shift from low- to no-alcohol beers, as consumers seek healthier choices and view the newer 0.0% brands as more modern. In South Africa, investment from Heineken and the emergence of a craft segment has helped to generate interest in the no-alcohol category. While no-alcohol beer has existed for decades, in markets like the US, no-alcohol beer has premiumised through the release of no-alcohol versions of non-lager styles, long the domain of no-alcohol beer. More recent no-alcohol styles, such as IPAs, stouts or porters, are starting to make a real impression, driven particularly by new challenger brands, many of which are not linked to traditional brewing. The recent no-alcohol extension of Guinness – despite some teething issues – will help to underline that no-alcohol beers are no longer the sole domain of lagers. While several key beer players continue to steer the no/low beer category, the market is fragmented with a number of smaller brands vying to establish themselves as market leaders in this space. The segment is likely to become even more of a focus for smaller craft producers who are able to bring a diverse range of products to the market in future.

How Asian drinks brands are targeting new markets

Most Asian drinks brands sell the majority of their volumes domestically, where brand awareness is high and drinking cultures are long established. For example, IWSR data shows that approximately 97% of Japanese beer, wines, spirits and RTDs are consumed in the local market. When looking at just the premium-and-above price segment, over 60% of Japanese wines and spirits are consumed locally. But as competition from international brands mounts, local distillers, brewers and winemakers are dedicating more time and resources to developing their presence in overseas markets.

“There are lot of local champions that have a very strong position within their own market but little presence outside,” explains Tommy Keeling, Research Director at IWSR. “As Asian populations grow richer, consumers are trading up to imported drinks brands and the position of local champions suddenly looks less secure, so many are looking to diversify abroad.”

Keeling adds that for many brands, the real benefit of international expansion is the resulting uptick in interest in their domestic markets. In the case of Chinese spirit baijiu, for example, exports are unlikely to ever be more than a fraction of local sales, but distillers are hoping growing interest in the category abroad will boost its popularity at home.

Baijiu is a wealthy category, so brands are able to invest in high profile display advertising, such as Wuliangye’s billboard in Times Square. One of the main aims of this strategy would be to target relatively wealthy Chinese tourists who are already familiar with the brand. Luzhou Laojiao, another large baijiu producer, sponsored the 2019 Australian Open with its high-end Guojiao 1573 brand, again, principally targeting Chinese viewers.

For smaller brands such as Fenjiu, the main goal in international markets is education. “We would like to continue educating the UK market on baijiu and increase both trade and consumer awareness and understanding of this category,” says Qiqi Chen, managing director of Cheng International, the UK distributor of Fenjiu.

The brand takes a more intimate approach to marketing through meetings, masterclasses and tasting sessions, all supported through a strong social media drive. “There are two main baijiu education themes for us,” says Chen. “One is introducing Chinese food and drink culture, and the other is showing how Chinese baijiu can blend well with the western lifestyle.”

In order to offer a “more direct experience” of its brand, Fenjiu will increase its work with bars, restaurants, hotels and retailers, as well as brands outside of the food and drink industry.

Keeling adds that once brands start to expand internationally, it is crucial for them to tailor their approach to the market in which they are selling. For example, in South Korea, soju consumption is widespread, so brands mostly compete on price. However, due to shipping costs, import duties and excise taxes, the product becomes more expensive in overseas markets. As such, brands would be better to promote a different set of values.

For Asian beer brands, giving consumers an authentic taste of their respective cultures is an important way to expand their foreign fan base. The UK in particular gives brands the opportunity to grow their reach through the restaurant channel. Indian beer brand Kingfisher, for instance, has 5,000 distribution points in Indian and Bangladeshi restaurants in the UK.

John Price, head of marketing at KBE Drinks, the UK distributor of Kingfisher, notes that the brand “can be found in every type of eatery”, from high street curry houses to Michelin starred restaurants. “The restaurant channel will always remain the beating heart of our business, but it is sometimes hard to break out of this into wider consumption occasions,” he adds.

This is where sports sponsorships come in. Through commercial partnerships such as these, brands become visible in a new context. Kingfisher is currently a partner of Southampton FC, Leeds United FC, Sussex County Cricket and Wigan Warriors Rugby League Club. “We don’t take on a partnership unless we get pouring rights and this gives consumers the chance to re-evaluate the brand in a fun and exciting environment,” adds Price.

Thailand’s Chang Beer, which is the official beer of Leicester City Football Club, has an international marketing strategy centred around provenance and heritage. “Growing internationally is a journey that is carefully curated with the right partners, the right channels and the right marketing mix,” says Ronnie Teo, head of group marketing at Chang.

“It is important to ensure that we work with partners who share the same long-term convictions as us. Our partners understand what our Chang brand stands for – its provenance and values – and collaborate with us to market the brand in the right sales channels with the right messaging.”

For a number of years, Chang has hosted the Chang Sensory Trails event in London, which celebrates Thai cuisine in a contemporary setting filled with music and street art. Events such as these allow Asian brands to become an essential part of the cultural experiences and representations of their respective nations.

Ultimately, says Teo, to grow internationally, brands must first have a strong domestic business. “To that end, we have seen our marketing efforts in Thailand pay dividends, with our market share growing by more than 15% share points between 2014 and 2019. This strong growth has made Chang an iconic local champion, appealing to Thais, as well as the millions of tourists that visit Thailand annually. With a solid domestic foundation, we were then able to springboard our international marketing efforts.”

Beam Suntory Reports 2020 Results

Beam Suntory, a leading global premium spirits company, reported full-year results for 2020.

Global net sales were flat for the year, as a return to growth in the second half offset lower sales in the first half of the year. Full-year sales grew 4% in the United States, as restaurant and bar activity improved in the second half and spirits continued to gain share from beer and wine. Sales were essentially flat in Japan, up at a single-digit rate in the UK and Russia, up high-single digits in Australia and Canada, and up double digits in Germany and South Korea. The impact of the pandemic led to lower sales in markets including Spain, India, China, South Africa and the Global Travel Retail channel.

Global sales for Jim Beam grew to surpass 11 million 9-litre equivalent cases for the first time, extending the brand’s leadership as the world’s number one Bourbon whiskey. Reflecting sustained consumer demand for premium brands, sales for Basil Hayden’s bourbon, Hornitos tequila, Toki whisky and Roku gin increased at double-digit rates. Sales were also exceptionally strong for Japanese ready-to-drink products and On The Rocks Premium Cocktails (acquired in September 2020), as consumer demand for convenience, refreshment and quality cocktails expanded.

“As we expected, consumer demand increased in the second half of 2020, even as the global pandemic continued to impact markets around the world,” said Albert Baladi, president & CEO of Beam Suntory. “I couldn’t be more proud of how our people adapted to confront the challenges of 2020 – from our frontline distillery workers to our sales teams, from our brand builders to every company function. As a result, we were able to meet consumers digitally in the emerging ‘home premise’ to support at-home cocktail-making and satisfy their expectations for convenience through increased investments in e-commerce and ready-to-drink products. At the same time, we supported our on-trade partners with innovations like cocktails to go, and guided by our vision of Growing for Good, we provided vital assistance to hard-hit restaurant and bar workers in markets around the world.”

“Looking ahead, the pace of recovery from the ongoing pandemic remains uncertain. In this environment, we expect to drive continued improvement in sales as we benefit from the strategic investments we made in 2020, the exciting brand plans we have in place, and our commitment to delivering quality to consumers at every step of the value chain up to the moment of consumption.”

Baladi also noted that Beam Suntory made substantial progress reducing its environmental impacts in 2020, and will soon announce a new global sustainability strategy featuring ambitious targets focussed on making a positive difference for nature, consumers and communities.

Update on Beam Suntory Growing for Good Initiatives

Environmental Sustainability

Carbon Reduction: Through the purchase of renewable electricity and the completion of multiple energy efficiency projects (Kentucky, Mexico and Scotland), Beam Suntory reduced its total Scope 1&2 carbon emissions by 25% compared to the 2015 baseline.

Water Efficiency: The company has reduced water use per unit of production by 29% (versus 2015 baseline) by optimising existing cooling systems and investing in more efficient cooling technologies at the Jim Beam distilleries in Kentucky.

Watershed Protection: The company has established Natural Water Sanctuary programmes at Maker’s Mark and adjacent to the Jim Beam distillery. The company continues to expand watershed protection activities to global manufacturing sites in India, Mexico, Spain, the US Virgin Islands and Ireland. Future activities are planned in Scotland, France and Canada. 

Sanitizer: To support hospital systems and first responders in the fight against Covid-19, the company’s facilities in Kentucky, Japan, Spain, Scotland, Ireland, Canada and Mexico produced sanitizer sufficient to clean more than 50 million pairs of hands.

Hospitality industry: The company provided more than $3 million to support restaurant and bar workers and their families across numerous markets. Initiatives included Maker’s Mark’s partnership with the LEE Initiative Restaurant Reboot Relief Programme and Restaurant Workers Relief Programme, which donated more than 1 million meals to restaurant workers in the US, the company’s Shift-Meals To-Go programme supporting US hospitality workers and their families, and support programmes for on-trade workers in markets including Canada, the UK, Germany, Spain, Brazil and India.  

Women in the Dry State of Gujarat are Jumping on the Alcohol Consumption Bandwagon!

Earlier, we reported that binge drinking among women has been increasing steadily over the past few years. Thirteen percent of adult women have reported binge drinking four times a month on an average while consuming five drinks per binge. A 2019 survey conducted by TU Dresden in Germany found that Assam led alcohol consumption among women in India. However, the North-eastern state is not the only Indian state where alcohol consumption has increased drastically. Gujarat, the Dry State, is climbing up the charts steadily too.

According to the National Family Health Survey (NFHS-5) released recently for the year 2019-20, it was discovered that the number of women consuming alcohol in the Dry State has doubled in the last four years. The survey studied a total of 33,343 women and 5,351 men from Gujarat. 200 women (0.6 percent) and 310 (5.8 percent) reported that they consumed liquor. 

Previously, in the NFHS-4 Survey (2015-16), the sample under study in the state included 22,932 women and 5,574 men amongst whom 618 men (11.1 percent) claimed they drank liquor while only 68 women (0.3 percent) claimed the same.

A comparison between both the surveys shows that while the number of women consuming alcohol in Gujarat has doubled, the number of men doing the same has nearly halved.

Gaurang Jani, a sociologist, said “The middle class and upper middle class have embraced the party culture in recent times. As a result, women in families have also started consuming liquor. Earlier, men used to go out to drink. Now, a new culture of consuming liquor in family parties has emerged. People are throwing family parties to celebrate even small events. Moreover, kitty parties have also contributed to higher liquor consumption among women, NRIs are also bringing liquor with them and enjoying it during house parties here with relatives.”

Jani thus pointed out that the rise in party culture as well as the growing acceptability of drinking in society has contributed to the rise in the number of women drinkers.

Binge drinking is cool for Indian women

More women are drinking and women are drinking more,” a new survey made eye-opening claims — and not for the reasons you’d think.

Men had succumbed to alcohol long back, but women had held back. Not long ago women didn’t dare to damage their image by showing the world that she in fact drinks and enjoys it too. Now women pour and fill their glasses with more than just lemon water and juice. Wine, beer, whiskey, vodka or a cocktail; women have come to love their drinks and how!

Alcohol consumption among women is rapidly increasing, not only because she wants to relax and have fun but there’s a bigger picture here.

Nearly half of adult women report drinking alcohol in the past 30 days. Approximately 13% of adult women report binge drinking and on average do so four times a month, consuming five drinks per binge. About 18% of women of child-bearing age (i.e., ages 18–44 years) binge drink.

Questions like ‘Are women more prone to absorb bigger drinks?’ ‘Do women have higher alcohol levels in their blood than men?’ are being asked and studied. Though women have had historically lower drinking rates than men, the negative effects of alcohol abuse are typically worse and more pronounced for women. The problem is exacerbated by the special dangers that alcohol poses for women. In general, alcohol affects women more strongly than men. This is both because women’s unique body chemistry interacts with alcohol differently from men and because women are on average significantly smaller than men, meaning the same amount of alcohol will have a greater impact.

Why women drink

The survey by the Community Against Drunken Driving (CADD) studied the alcohol consumption pattern in Delhi and has revealed some major reasons behind alcohol consumption among women. Rising affluence, aspirations, societal pressure and exposure to a different lifestyle is driving women to experiment with alcohol, stated the survey. The results were found among 5,000 women aged between 18 to 70 in Delhi.

Among the reasons why women drink, the survey says “mostly all social activities are centred around alcohol, and alcohol is seen as a quick and easy social lubricant, and when everyone is doing the same thing, it does not seem like a problem. It is just the norm.”

Alcohol consumption in India increased by nearly 40% and women’s alcohol market is expected to grow by 25% over the next five years.

In Delhi itself, 40% of men and 20% of women (almost 15 lakh women) are alcohol consumers; the survey quotes a report by AIIMS as saying.

The survey reveals that 43.7% women in the age group of 18-30 years consumed alcohol out of habit or desire to do so, 41.7% women in the age group of 31-45 years consumed alcohol as an occupational requirement or because of social norm.

Over 53% women above 60 years and 39.1% women in 46-60 years had alcohol for emotional reasons.

“Driven by the market forces where cocktail and berry drinks are being promoted as feel good and relaxing drinks for women, women are enticed into drinking more with a promise of good time that awaits them,” it says.

The CADD survey lists out more reasons why women drink, it says, “At times just to fit in or as a way to unwind, more spending capacity/affluence, another way of equal opportunity or pursuit at work place/profession, alcohol as a coping mechanism to stress, depression, loneliness anxiety, pain, mental and physical traumas and to cope with the needs and pressures of fast paced life.”

India has witnessed a steady rise in its consumption of alcohol in the last decade. A 2019 study by researchers from TU Dresden in Germany, concluded that between 2010 and 2017, alcohol consumption in India increased by 38% – from 4.3 to 5.9 litres per adult per year. The decade also witnessed a boom in home grown whisky and gin labels, and saw both men and women significantly altering their tipple choices and consumption patterns.

According to this survey, women in Assam consume much more alcohol than their counterparts in other states and union territories in the country. The ministry’s 2019-20 data showed that 26.3% of women in Assam who are in the 15-49 years’ age category consume alcohol, which is the highest among all states and union territories (UTs).

Notably, in 2019, another survey, conducted by Community Against Drunken Driving (CADD), took stock of the men and women in Delhi and their drinking habits, and concluded that “More women are drinking – and women are drinking more.”

Women are also not just taking up important roles in breweries, but also leading alcohol brands in various capacities. In fact, Dewar’s master blender Stephanie Macleod, who created the world’s best whisky, as per the 2020 edition of International Whisky Competition, was recently awarded the “Master Blender of the Year” award.

New research has found that despite the potential health risks of exceeding national drinking guidelines, many middle-aged and young-old women who consume alcohol at high risk levels tend to perceive their drinking as normal and acceptable, so long as they appear respectable and in control.

Amrut launches Fusion X (ten)

To commemorate and celebrate its Late CMD N R Jagdale legacy

To celebrate the 10th anniversary of the brands flagship Single Malt Whisky – the Amrut Fusion, the company launched its ultra-limited-edition Single Malt whisky – the Amrut Fusion X (ten) yesterday. The Fusion X also commemorates the legacy of the their late CMD Neelakanta Rao R Jagdale with the launch timed to celebrate his birthday.

The reason we call it an ultra-limited-edition is due to its availability of only 1010 bottles worldwide. And in India only 60 bottles will be released in Bengaluru at a price of Rs. 15000 per bottle at select retail outlets.

Amrut Fusion X Ceramic Bottle

Amrut Fusion X is a combination an ode to the company’s past and also their vision for the future. The whisky has been created after further maturing Amrut Fusion for a period of 4 years in a Px-Sherry casks, adding a dimension to the whisky unlike ever before, taking the total age of the spirit to nearly 8-9 years. It also comes packaged in a special ceramic bottle that features a sketch of their late CMD, Mr. Jagdale along with number of other important highlighted places on the bottle, that have played a key role in the journey.

The bottle is a culmination of talents from three countries, which includes India, England and Portugal. With the spirit coming from India, the special ceramic bottle has been crafted by Wade from England and the cork is handpicked and shipped from Portugal.

The Fusion X is also the first time that any alcobev product in India has integrated an NFC chip on the bottle that can be scanned using a smart device. Buyers can tap the NFC chip to verify if the bottle has ever been opened before. It also provides detailed information about the whisky and users can provide feedback of the same as well.

Rakshit N Jagdale, Managing Director, Amrut Distilleries said ‘it gives me immense satisfaction to make this special release of Fusion X on his birthday as both a celebration of 10 years of love by consumers around the world and a tribute to his life and legacy.’

The bottle comes in a lush velvet jacket and is surely something worth collecting.

Pernod Ricard posts encouraging results than expected

The world’s second biggest alcobev manufacturer, Pernod Ricard posted its results recently and they seemed more encouraging than expected. The Q1 FY21 marked and improvement versus the Q4 FY20. The results were encouraging thanks to partial on-trade reopening and continued brand resilience in off-trade as India continues to be a resilient market for the company.

The total sales for the first quarter of FY21 totaled €2,236 million, which included an organic decline of -6% due to off-trade channel remaining resilient in the USA and Europe. Although there was a partial on-trade reopening, the report suggests that the channel is still disrupted with Travel Retail showcasing significant decline.

Results in India

Closer to India, which is one of the key markets for the manufacturer, continues to be in a double-digit decline. The growth in India revenues from its India operations grew only 6% in the year ended March 2020 against 27% jump a year earlier. The company recorded gross sales of Rs 21,424 crore in India in the year-ended March. However it recorded a 24% jump in its net profit for the year at Rs 1,612 crore as it focused more on premium brands. This was more than double of its larger rival United Spirits’ profit of Rs 705 crore during the year. Currently, India accounts for 11% of the manufacturers global sales. The company that follows a July-June fiscal globally, said that the Indian business declined 11% in the year ended June 2020 with heavy impact due to the pandemic. Alexandre Ricard, Chairman, Pernod Ricard informed investors last month that the fact that the business fell only 11% in the FY20 ‘despite the very strict lockdown disrupting the fourth quarter’ showed India’s resilience as a market. “We consolidated our leadership position with our market share still above 45%, and in fact, still growing slightly,” he added.

Results by Geography

With the festive season in the offing the results were strong in markets like USA and China, with strong shipments auguring well for the company. There was good resilience in the markets of Europe as well thanks to Off-Trade and ‘staycation’ over the summer. There was also strong dynamism in the UK and Germany with France nearing stability. However the markets of Spain and Russia showed decline.

By category, Sales were driven by

International Brands declined by -10% with significant declines for Martell, Chivas and Ballantine’s, primarily due to the restrictions in Travel Retail. But Malibu and The Glenlivet displayed strong growth with Jameson showcasing resilience. Local Brands saw a decline of -6%, with decline of Seagram’s Indian whiskies. But there was double-digit growth of Kahlua, Passport, Ramazzotti and Wiser’s. Specialty Brands saw an increase of +30%, thanks in particular to Lillet, Malfy, Aberlour, Avion, Altos and Monkey 47. Wines registered a growth of +9%, driven by double-digit growth of Campo Viejo and Brancott Estate with Jacob’s Creek growing by +8%. The overall reported sales declined by -10% due to unfavourable FX impacts, mainly from US Dollar and emerging market currencies. The Q2 is expected to still be strongly impacted by Covid-19, but Sales to return to growth in H2. Alexandre Ricard added that for FY21, “we expect continued resilience of our business in an uncertain and disrupted environment. I would like to take this opportunity to praise our teams, whose engagement and performance are exemplary

in these very challenging times. We will continue to implement our strategy, in particular accelerating our digital transformation. We will tightly manage costs while maintaining the agility to reinvest to adjust to market opportunities.”

CIABC recommendations to out the industry back on track

By Bhavya Desai

With the country in the midst of an unprecedented crisis due to the ongoing Covid-19 virus pandemic, States/cities, private offices and commercial establishments are under complete lockdown. Like most businesses the alcobev industry is also witnessing a challenging scenario. With the companies unable to operate and wholesale and retail trade coming to a standstill, most company wholesalers and dealers are sitting on high amount of unsold stock from the alcobev industry.

To make matters worse the lockdown came right in the middle of the financial year end , which means that companies haven’t been able to complete their statutory requirements that ought to be met to keep the continuity of operations.

It is a known fact that the alcobev industry is one of the largest contributors to the economy. It approximately contributes Rs. 200,000 crores by way of various taxes and also sustains livelihood of nearly 40 lakh farmers employing nearly 20 lakh people directly and indirectly. The industry contributes anywhere between 20-40% to the States Revenue of tax receipts.

But the lockdown has not only brought the alcohol sales at a grinding halt, creating a financial impact on the companies. There are several other pending challenges that have added to the current scenario. The rise in price of ENA, its key raw material, denial of price increases by some states and delays in payment by some others. The concern for most of the players in the industry is that a prolonged shut down of industry will not only have a huge economic cost on companies, it may also force the farmers and workers in to joblessness as a result of that.

Not to mention that the prolonged unavailability of legal alcohol has already witnessed growing sale of illicit liquor in just 2 weeks.

CIABC has made several recommendations to the Commerce and Industry Ministry to get the industry back on track with some immediate curative measures for mitigation of problems arising out of lock down, systemic changes in regulation required in light of possibility of prolonged COVID19 threat and the phased opening of the alcoholic beverage industry.

CIABC Recommendations

As part of the Curative Measure, CIABC recommended that the Excise year ended on 31st March, which was in the middle of the lock down phase, companies/distributors/retailers have not been able to clear stocks or statutory requirements. Hence, a blanket order extending the current excise year with all its permissions and approvals be done until 30th June 2020.

This should be done without imposing any fees for the period of 1st April to 30th June as companies have been out of operation so far and even under best circumstances will be only partially functional during this time.

Systemic Changes in The Way Industry Operates

While most practices under this remain constant like other industries, there are several important recommendations that include the continuity of operations with all efforts be made to ensure that the business restarts and continues with minimum necessary disruption.

One of the important changes that CIABC is asking for is the shift to Online Processing of Permissions, Approval, Licensing, Registration, Permits, EVCs etc. With most of these still physical in nature and needing human interaction this possibly could be the best time to use technology and shift those processes online. Also this might act as a step into to the future where such operational requirements can be shifted online as part of ease of operations.

Phase Wise Opening of The Sector

With this being a unique time in order for the sector to start functioning appropriately the committee has recommended that the licenses and permissions for Distilleries/Bottling Plants including industry, excise, pollution etc., that lapsed on 31st March 2020 should be extended until June 30th, 2020 without any additional charges. Also that the companies should be allowed to apply for renewal of these licenses online on any time prior to 30th June and those not seeking any modification to licenses may automatically be granted renewal. Those seeking modifications may be allowed to apply online with supporting documents and a decision on application may be conveyed online.

Existing inventory of packaging materials that became outdated on closure of the Excise Year may be allowed to be used until 30th June. All distilleries / bottling plants not falling within hotspot zone (as identified by the Government) should be allowed to start operations. Naturally the factories are expected to operate at 50% strength and the salaries of the employees should be paid in usual manner without deduction for forced absence.

But on-site physical verification of production and shipping of alcoholic beverage by excise should be discontinued until June 15th. A daily self-declaration by the Head of the plant along with production and shipping details may be accepted at this time.

Indenting/Transit/Stock Movement

In terms of indenting/transit and stock movement export permits, import permits, and transit permits issued in year 2019-20 should be allowed to be used until May 15th. Companies should be allowed to apply online for new permits and the approval should be given online with excise authorities introducing barcodes on permits.

Wholesaling/Distribution/ Warehousing

When it comes to this aspect CIABC states that all licenses related to distribution should be extended until June 30th without any extra fees. The renewal, auction or lottery allotment of licenses should be done online to minimise people interaction at any time prior to June 30th. Also, all stocks produced, shipped or received at distribution warehouse until 31st March 2020 should be allowed to be sold in 2020-21 without any fees or penalty. All other necessary permissions like TPs and so on can also be done online.

CIABC also recommend that no demurrage should be charged for stock lying in Government warehouse until 31st May.

Retail Shops

With all retail operations closed the industry has recommended that retail licenses granted for year 2019-20 which expired on 31st March 2020 should be extended until June 30th, 2020. Shops outside identified COVID19 hotspots should be allowed to open from 9 am to 11 pm From April 15th to May 15th and from 11 am to 11 pm between May 15th to June 15th with regular operations resuming from June 15th.

Retail Shops should be permitted to sell stock purchased or ordered in 2019-20 till stocks last with no retail shop manned by more than two salesmen. No shop should permit more than two customers if it’s a walk-in shop or one customer if it’s single window shop.

Pubs, Bars and Restaurants

The committee recommends that all licenses granted by Excise, Pollution, Fire and local authorities for year 2019-20 which expired on 31st March 2020 should be extended until June 15th 2020 without any charges. On-trade establishments that are outside the identified hotspots should be allowed to operate in a phased manner in order to prevent crowding.

For instance, only takeaways of alcohol and food be allowed from April 15th to April 30th and from May 1st to June 15th premises may be allowed to operate at 50% of its seating capacity.

Home Deliveries

One of the key recommendations that CIABC is making is for allowing home deliveries of alcohol subject to necessary checks and diligence. With most food delivery companies already working they could also be enrolled to delivery alcohol. Also, shops should be asked to enrol for home delivery through online applications.

And in order to further the cause the Government may charge a fee, this being an addition to license. Customers can place an order online or over phone, along with an ID proof establishing age and the delivery limit of the amount of liquor delivered or frequency of delivery can be defined.