Tag Archives: Industry

Marrying ethanol with petrol the need of the hour

In an interview with Ambrosia, V.N. Raina, Director General, AIDA, stresses on the need to blend 10% of ethanol with Petrol to save valuable foreign exchange for the country.

What is the current situation of ethanol production in India?

The production of ethanol for mixing with petrol was introduced in the country during the year 2006-07. Ethanol is an important bio-fuel and is blended with petrol under EBP programme. It is an important component of national bio fuels programme. Ethanol is a source of energy which is indigenous, non polluting and virtually inexhaustible.Therefore to promote this bio fuel, the govt. has scaled up the blending targets which are given below:-

Production of Surplus grains declared (2018-19)

S.No.               Products Qty                 ( Lac Tonnes)

1                        Maize                            30-40

2                        Bajra                             9.00

3                       Jawar                             4.70

The initial aim was to mix 5% ethanol with petrol by the season 2016-17. However, to promote bio fuel the govt. scaled up the blending targets from 5% to 10% to be achieved by the season 2021-22 under Ethanol Blended with Petrol Programme (EBP). However, due to various reasons implementation of this programme was not seriously taken up till the year 2017 when the govt. notified the programme. But with all the efforts of the govt. and the distillery industry producing ethanol from molasses 5% blending could not be achieved even till the year 2016-17, However, during the current year 2018-19 (closing 30th Nov. 2018) total blending of approx. 6.2% has already been achieved. This also included the ethanol produced from grains “not fit for human consumption” to supplement the ethanol supplies.

The entire ethanol game plan envisaged by the govt. Can be explained in nutshell as below:

Centre has set a target of 10% ethanol blending by petrol by 2022, leading to forex savings of `12,000 crores a year.

There was 3.5% blending in 2016-17 sugar season and 4.0% in 2015-16.

Nationwide average for ethanol blending stood at 4.02% as on Oct.1

The latest proposal will allow ethanol production from surplus quantities of maize, jawar and bajra, as well as other feedstock such as fruit and vegetable wastes.

Ethanol blending in petrol has risen from 38 crore litres in supply year 2013-14 to an estimated 146 crore litres in 2017-18.

What are the incentives being given by the government to ramp up the production given the increasing ethanol requirements in India?

The Govt. first introduced financial assistance scheme by extending financial assistance through spot loans to sugar mill attached distilleries to set up plant and machinery for production and enhancement of ethanol production capacities in the country. Many distilleries attached to sugar mills applied for and received the financial assistance form the Ministry of Consumer Affairs, Food & Distribution, GOI enabling them to put up distilleries and ethanol production equipment. The financial scheme included facility of interest subvention @ 6% per annum or 50% of rate of interest charged by banks, whichever is lower with certain conditions.

In order to augment ethanol production capacity and thereby also allow diversion of sugar for production of ethanol, in principal approval has been granted for extension of soft loan of `6139 crores though banks to the mills for setting up new distilleries /expansion of existing distilleries and installation of incineration boilers or installation of any method as approved by Central Pollution Control Board for Zero Liquid Discharge for which Government will bear interest subvention of `1332 crore. About 114 sugar mills are likely to be benefitted as a result of this measure and ethanol production capacity of sugar mills in the country is likely to be enhanced by about 200 crore litres per annum in the coming three years.

The Govt. has notified a new scheme on 08.03.2019 for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity. Under the scheme Govt. would bear `2,790 core towards interest subvention for extending indicative loan amount of `12,900 crore by banks to the sugar mills for augmentation of ethanol producing capacity.

The Govt. has notified a scheme on 08.03.2019 for extending financial assistance to molasses based stand-alone distilleries. Under the scheme, Govt. would bear `565 cores towards interest subvention for extending indicative loan amount of `2600 crore by banks to the molasses based stand-alone distilleries to augment their ethanol production capacity.

On further request from distillery industry and All India Distillers’ Association (AIDA), govt. has also agreed to consider financial assistance on the same condition to grain based distilleries for producing ethanol. Many distilleries have already applied. In the meantime loans have been sanctioned as far as molasses based distilleries are concerned. The scheme for loans to grain based distilleries is also under consideration of the govt. This step will provide further possible resources towards increasing the production of ethanol under EBP Programme.

What are the current requirements of ethanol and are there any deficit and how are they bridging it?

The current requirement as per the programme of introducing 10% blending by the year 2022 requires approximately 300 crore ltrs. of ethanol. The govt. has announced various incentives and financial assistance to the industry. It is hoped by the closing of the year 2019-20 when new distilleries would have gone up including increase in existing production capacities in the existing units due to the positive steps taken by the govt., the 10% blending will be achieved by the year 2020- 21/22.

The prices announced for Ethanol for supply year 2019-20 (1st Dec. 2019 – 30 Nov. 2020) are:

S.No.                            Products                                              Price (Rs.) / BL

1                                   “C” Heavy Molasses                            43.75

2                                   “B” Heavy Molasses                            54.27

3                                   Sugarcane Juice                                   59.48 + GST & Transportation charges

The revision of prices of ethanol supplied from grains is also under consideration by the govt. in consultation with the distillery industry

In addition the govt. has also taken steps in consultation with the industry to set up and revise the prices of ethanol from time to time so that the industry feels protected about the production and supply of ethanol. A very recent price increase has been introduced by the govt. 01.01.2019, which now will bring the price of ethanol from various sources to the level given below w.e.f. 01/12/2019.

The revision of prices of ethanol supplied from grains is also under consideration by the govt. in consultation with the distillery industry.

The govt. of India very rightly announced use of surplus grains in addition to the spoilt and damaged grains for production of ethanol. The govt. has declared following surplus grains under this policy which could be used for production of ethanol for the year 2018-19. It will be further increased and announced from time to time by the govt. in consultation with the concerned departments. The present quantities of availability of surplus grains in the country which could be used by distilleries for production of ethanol are as below:

Will the petroleum companies be able to absorb the new price increase?

The setting up of prices are being announced by the govt. of India in consultation with the petroleum companies and it has been agreed that the prices have to be revised from time to time if the need be, to ensure continuous supply of ethanol and to increase its production as much as possible. The petroleum companies are part of the final prices of ethanol, calculated and announced by the govt.

What is the current requirements of ENA in the liquor industry ? Is there sufficient production to meet the needs of the industry?

Current requirement of ethanol as well as ENA depends upon the production and availability of raw materials for the basic production of Rectified Spirit (R.S)from which ENA and / or ethanol is produced. As per the present scenario the supply of ENA for liquors is being carried out by the industry alongwith supplies of ethanol. However, the market now competitive and has to be kept in mind for prices of liquor which are controlled by the state govts. Considering the market price of the ENA vis-a-vis that of Ethanol, it should be fair to the liquor industry as well.

A good quantity of grain spirit being produced is also in the market now and there sufficient quantity is available both for ENA and Ethanol as per the programme set up by the govt. However, it vastly depends upon competitive pricing and balanced affordability.

What incentives is the government giving for ENA production, both for domestic consumption as well as for exports?

The procurement and supply of ENA for potable purposes comes under the ambit of state govts. and the state govts. have to ensure good prices for IMFL for continuous availability of ENA in the competitive market of alcohol production in the field. The Central Govt. has no role for fixation or revising liquor rates and prices in the market, which is under the govts. of respective states.

What are the alternative feedstocks government is looking at for ethanol production besides traditional molasses and grain? And what are the challenges we have for the same?

The govt. of India has been on the look out for many alternatives, sources and resources for finding out alternative feed stocks for production of Ethanol. The govt. has already considered all feed stocks which are possibly available like agricultural wastes, forest wastes, bagasse, bamboo miscellaneous millets etc. and the research in this regard is continuously being undertaken for selecting and finalising the new feed stocks for production of ethanol.

There is an option under the research programme which will continue for searching out various resources of feed stocks and resources from all fields will be studied provided they are reasonably affordable and competitive with other feedstocks.

Will electric vehicles disrupt the demand for petrol and as a result the demand for ethanol?

No, in the near foreseeable future there is no possible disruption of demand for petrol or ethanol as a result of introducing electric vehicle in the country. The demand for petrol is rather expected to increase rapidly as the number of motor vehicles on the road is increasing by the day.

Dr. Uppiliappan Gopalan – awarded Most Admired Business Leader for 2019

The winners of the awards for most Admired Leaders 2019 and Prestigious Brands of Asia 2019 were announced at the Malaysia, Global Business Symposium organized by Herald Global at Hotel Inter Continental recently.

The event was attended by honourable guests from all over Asia. The guest of Honour included Datuk Seri Garry Chua – President, Malaysia Retail Chain Association, Datuk AT Kumararajah – Deputy President, Malaysian Associated Indian Chambers of Commerce and Industry (MAICCI), Datuk Munirah Abdul Hamid – Founder, Pertiwi Soup Kitchen, Dr Zainab, Malaysia Palm Oil Board and Mr. Surendran Menon from Malaysia Indian Business council. They shared their respective opinions and perspective alongwith all the leaders and brands in a quick byte session about the topic “One Asia – One Vision, One Identity, One Culture” for improving relations to maintain integrity between Asian nations.

Dr. Uppiliappan Gopalan

After a sharing views, eminent personalities and brands from all over Asia were awarded for their achievements and promising future. Dr. Uppiliappan Gopalan, COO of KALS Group – awarded as most admired Business Leader for the year 2019. Other people who bagged the awards are Ms. Larissa Ping, Miss World Malaysia, Mr. Georg Sparschuh, President of SCHOTT tubing, Mr. Vishen Lakhiani, Mr. Uday Kotak – CMD of Kotak Mahindra Bank, Mr Mukesh Amabani – CEO of Reliance Industries Limited and Mr. Sachin Tendulkar – Indian Cricketer Dr Uppiliappan Gopalan- Group COO (KALS Group), an astute strategist with impeccable business acumen, is a Chemical Engineer (B Tech) and an Post Diploma in Management from IIM-Bangalore with Finance & Operations Specialization. He holds an Executive Diploma in Advanced Financial Analytics from globally renowned London Business School (LBS). He also holds a Doctorate Degree in Supply Chain & Finance Integration. Dr Uppiliappan is also Prestigious awardee of Peter Drucker Award for the year 2016 for the outstanding performance in Finance & Business Process Automation Category of Automotive Sector during his stint with M/s Bhatia Brothers Group as COO, an AED 1.8 Mn Conglomerate in UAE with presence in 10 Countries. Dr. Gopalan is a strategic think-tank cum implementer with recognised proficiency in spearheading operations/business with an aim to accomplish corporate plans and goals successfully. Dr. Gopalan is a well-known adjuct faculty for Finance & Supply Chain and has been invited by various forums as Conference Speaker & Conference Chair. Currently, he serves as Technical Advisory Committee – Titanium Finance Conference for Finance Professionals (Ireland). He was a Keynote Speaker – Northwest Business Group Conference in Mastering Human Capital (Istanbul) – Role of TQM in Value Addition for Business; Session Planery Speaker –ARTDO – Manila (Asia-Pacific- Re-engineering Towards a Strategic and Driven Workforce; and Conference Co-Chair for 17 International Symposium of Banking, Finance, & Economics (Singapore). Under Gopalan’s guidance, organisations attained various expertise in financial services and solutions. Being the Top 100 Globally acclaimed SAP Certified Resource for Finance, Treasury, & Supply Chain Modules & Top 10 Operational Excellence Certified Professional in APAC, Dr Gopalan’s core strength lies in Strategy Planning, Mergers and Acquisitions, Emerging Markets Development, Techno-commercial Evaluations, Financial Modelling and Business Valuations, Project Management (Greenfield / Brown Field), and Blue Ocean Strategies. With the hands-on expertise in handling a revenue size of 600 Million USD, Dr. Gopalan is versatile on P & L Management, Operational Excellence, Excellence in Financial Management, & Projects Management.

Scotch Whisky makes strong Economic Impact

With the Brexit debate dominating British politics, the fate of Scotch, the money spinner for Scotland will be closely watched.

The Scotch Whisky industry is strategically important to the economies of Scotland and the United Kingdom. This report – building on work by the Centre for Economics and Business Research (CEBR) – explores Scotch Whisky’s direct contribution to GVA, international trade, employment, supply chain and revenue through excise duty. The contribution of the Scotch Whisky industry to the UK economy has grown by 10% since 2016 to £5.5bn.

A new report by the Scotch Whisky Association, building on research carried out by the Centre for Economic and Business Research (CEBR), also reveals Scotland’s national drink generates two-thirds of all spirits Gross Value Added (GVA) in the UK. The industry has been buoyed in recent years by record exports, reaching £4.7bn in 2018, and several new distilleries beginning production and opening their doors to tourists.

This success comes despite the industry continuing to pay the fourth highest duty rates in the EU, and one of the highest of spirit producing nations globally. Recent freezes to UK duty have helped the industry to reinforce its vital importance to the UK economy. Karen Betts, Chief Executive of the SWA, said:“This research shows the huge contribution that our industry plays to both the Scottish and UK economies.

“Significantly, the research shows that our industry’s GVA increased by 10% to £5.5bn between 2016 and 2018, as a result of Scotch Whisky companies’ continued export success and the industry’s consistent investment – over £500 million in the last 5 years – in production, distribution, marketing and tourism.

“Despite the challenges of Brexit, this is investment that continues to flow, with more projects planned and more distilleries set to open – a sign that the Scotch Whisky industry remains confident about the future. This is great news for our many employees, our investors, supply chain and, of course, for our consumers all over the world, who love Scotch. “This report also highlights the high rate of domestic tax that Scotch Whisky faces in the UK. In the US, Scotch and other whiskies are taxed at just 27% of the rate that HM Treasury taxes us here at home. We will continue to press the Chancellor for fairer treatment of Scotch Whisky in our domestic market, which reflects the vital economic contribution the thousands of people who work in whisky make to the UK economy every day.”

Scotch Whisky provides £3.8bn in direct in GVA to Scotland – helped by regulations in place that requires all Scotch Whisky to be distilled and matured for at least three years in Scotland. This means Scotch Whisky contributes more than double than life sciences (£1.5bn) to the Scottish economy, supporting more than 42,000 jobs across the UK, including 10,500 people directly in Scotland, and 7,000 in rural communities.

The sector was found to perform a crucial role in driving productivity across Scotland. The manufacturer of beverages in Scotland – dominated by Scotch – produces £210,505 GVA per employee. Comparatively, the industry is more productive than the energy sector (including renewables) at £173,511 per head, life sciences at £93,735 per head, and creative industries at £60,712 per head.

Exchequer Secretary to the Treasury Robert Jenrick MP said: “I’m delighted to see how this important sector is thriving. “We are supporting the Scotch whisky success story by freezing duty on spirits again this year. “Our record of reductions and freezes to alcohol duties have provided more than £4bn of support to the drinks sector here in the UK.” Rural Economy Secretary Fergus Ewing MSP said: “I welcome the contribution that the Scotch Whisky industry makes to the Scottish Economy. “The industry’s performance is testament to the hard work of those who work in this important sector, making Scotch Whisky one of Scotland’s greatest global exports.”

France’s buoyant US Spirits Business Tops 200 Million Bottles

France has been known for its luxury spirits brands and the US is one of the biggest markets in the world for premium spirits. Naturally French exports are directed to this market.

French spirits exports to the US have doubled in ten years and now account for more than 200 million bottles a year, says Christophe Macra MW, spirits expert and one of France’s Masters of Wine.

He said that interest in spirits was growing worldwide due to better distillation quality, innovation and new spirit-producing regions entering the market. Spirits consumption would continue to grow in both economically prosperous and developing regions.

At a spirits Master Class and review of market trends at Vinexpo 2019, Macra traced four trends in spirits development. He also predicted which five spirits categories would dominate global spirits in five years time. M Macra illustrated his review of international trends with a tasting of Calvados Armagnac, Gin and a Gentian aperitif and cocktail ingredient from France, Vodka from Ireland, Mezcal from Mexico, Whiskies from Sweden and Taiwan. The diversity of spirits and their origins showed that “The world wants spirits and people want to drink them”. A growing spirits distribution sector worldwide – especially in France where there were now between 20 and 30 national distributors compared with three or so 29 years ago – was further evidence of trade and consumer demand. Trends pushing spirits expansion are: revivals of traditional spirits such as Calvados and Armagnac where there was growing interest in Asia; rediscovery of locally-produced spirits, eg Irish Whisky, Gin and Vodka; global interest in little-known spirits such as Mezcal; new exotic spirits such as agricultural rum from Tahiti, “where no spirits at all were made 10 years ago”.

Similarly, in Sweden 12 whisky distillers operate using locally grown malt and wood casks. Taiwanese whisky was now a huge market characterised by accelerated maturation in a warm climate and excellent cask selection. M. Macra was asked to forecast the five spirits likely to dominate world growth in the next three to five years. He nominated: World Whisky – “still very strong and growing”; Rum – “mostly spirit made from molasses, but a growing contribution from rhum agricole; Brandy – “high quality brandies of all kinds”; Tequila and Mezcal – “growing interest worldwide” and Local craft spirits – “small distillers of high quality –hence the trend to ‘drink local’”

Worldwide Alcohol Consumption Declines -1.6%

IWSR 2018 Global Beverage Alcohol Data Shows Growth in Spirits, but Beer and Wine Volume is Down; Market Expected to Grow by 3% Over Next 5 Years

Beverage alcohol drinkers across the globe consumed a total of 27.6bn nine-litre cases of alcohol in 2018, but while that number represents a decrease of -1.6% from the year prior, new data from the IWSR forecasts that total alcohol consumption will steadily increase over the next five years, to 28.5bn cases in 2023.

In terms of retail value, the global market for beverage alcohol in 2018 was just over $1tn, a number which the IWSR expects to grow 7% by 2023 as consumers continue to trade up to higher-quality products.

These figures – and more than 1.5m other points of data – are included in the just-released IWSR Drinks Market Analysis Global Database, which also shows:

Gin was the Leading Global Growth Category in 2018, and Forecasted to Reach 88m Cases by 2023

The largest gain in global beverage alcohol consumption in 2018 was in the gin category, which posted total growth of 8.3% versus 2017. Pink gin was a key growth driver, helping the category sell more than 72m nine-litre cases globally last year. In the UK alone, gin was up 32.5% in 2018, and the Philippines (the world’s largest gin market) posted growth of 8%, fueled by a booming cocktail scene and premiumisation of the market. By 2023, the gin category is expected to reach 88.4m cases globally, with particular strong growth in key markets such as the UK, Philippines, South Africa, Brazil, Uganda, Germany, Australia, Italy, Canada and France. Notably, Brazil has emerged as a new hotspot for the category, with volumes there more than doubling last year and forecasted to grow at 27.5% CAGR 2018-2023, as the gin-and-tonic trend has increased in upmarket bars of São Paulo and Rio de Janeiro.

Consumption of Whisky and Agave-Based Spirits Continues to Increase

Spurred by innovation in whisky cocktails and highballs, the global whisky category increased by 7% last year, driven in large part by a strong Indian economy (whisky grew by 10.5% in India, as consumers continue to trade up in the category). The US and Japan posted 5% and 8% growth, respectively. The IWSR forecasts whisky to grow by 5.7% CAGR from 2018 to 2023, to almost 581m nine-litre cases. Also, continued interest in tequila and mezcal (especially in the US), and innovation in more premium variants and cocktails, drove the agave-based spirits category to 5.5% global growth in 2018 – and is expected to post 4% growth over the next five years (2018-2023 CAGR).

Mixed Drinks and Cider Grow

The mixed drinks category (which includes premixed cocktails, long drinks, and flavoured alcoholic beverages) grew 5% globally in 2018. By 2023, it is projected that more than 597m nine-litre cases of mixed drinks will be consumed across the world. The growth is backed by continued strong gains in ready-to-drink (RTD) cans in the US and Japan, the category’s two largest markets. In Japan, most RTDs are locally made and almost exclusive to Japan. Their popularity is partly due to the fact that they are relatively dry, which makes them more food-friendly and sessionable. In the US, the popularity of alcohol seltzers has been a tremendous engine for growth in the RTD market. In the cider category, as investment levels in those products continue to rise, almost 270m cases are expected by 2023, a 2.0% CAGR 2018-2023. Both of those categories (mixed drinks and cider) are taking share from beer as perceived accessibility increases (less bitter, easier to drink.)

Vodka, Liqueurs, and Cane Spirits are in Decline

Vodka lost volume in 2018 (-2.6%) as the market for lower-priced brands continued its decline in Russia and the Ukraine (two of the largest markets for this spirit). Higher-priced vodkas, however, showed a more positive trend last year. Nonetheless, the outlook for total vodka over the next five years remains sluggish as the category is forecasted at -1.7% CAGR 2018-2023. Also in decline is the flavoured spirits category (liqueurs), which dropped by -1.5% globally in 2018, and is expected to continue to slip in 2019 before rebounding slightly in 2020. Cane spirits (primarily Brazilian cachaça) was down -1.6% last year, and is forecasted to lose another 4.5m cases by 2023.

Beer Continued to Lose Volume in 2018, but is Expected to Rebound

Global beer declined -2.2% in 2018, impacted greatly from volume decreases in China (-13%). Other large markets such as the US and Brazil also fell (-1.6% and -2.3%, respectively), while Mexico and Germany saw growth (6.6% and 1%, respectively). The future outlook for beer, however, paints a more positive picture, as the category is expected to show a slight increase in 2019 and post a 0.7% CAGR 2018-2023.

Wine Volume Declines, but Value Increases

Wine, which had posted strong global growth in 2017, lost -1.6% in volume in 2018 as wine consumption declined in major markets such as China, Italy, France, Germany and Spain (the US market was flat). However, though consumers are drinking less wine, they’re increasingly drinking better – pushing wine value to increase. Globally, the retail value of wine is projected at $224.5bn by 2023, up from $215.8bn in 2018. The one bright spot in wine volume is the sparkling wine category, which is expected to show a five-year CAGR of 1.17% 2018-2023, driven in large part by prosecco.

Low- and No-Alcohol Products on the Rise

Low- and no-alcohol brands are showing significant growth in key markets as consumers increasingly seek better-for-you products, and explore ways to reduce their alcohol intake. Growth of no-alcohol beer is expected at 8.8%, and low-alcohol beer at 2.8%. No-alcohol still wine is forecasted at 13.5%, and low-alcohol still wine at 5.6%. Growth of no-alcohol mixed drinks is predicted at 8.6%. (Above figures are all CAGR 2018-2023.)

Top Ten Performing Global Markets, 2018-2023

A look at the world’s fastest-growing beverage alcohol markets shows an emergence across a variety of developing countries. A combination of growing legal-drinking-age populations and healthy economies is driving some of this growth, which is expected to continue over the next five years.


“Every year our analysts spend months traveling the world to speak with suppliers, wholesalers, retailers, and other beverage alcohol professionals to assess what is happening market by market in this fast-changing business,” says Mark Meek, the IWSR’s CEO. “The raw data we collect is enormously valuable, but equally important is what that data tells us in terms of trends, challenges, and opportunities facing the industry.”