One common thread among all the craft gin makers is that they are kind of globe trotters and well-heeled. And these journeys make them richer (I am not talking financially here). Take for instance, Cedric Vaz, Director of Global Spirits and Foods and the creator of the arguably the first craft gin from Goa – the Black Jewel.
It was on one of his trips to Europe between 2010 and 2012 that he noticed that gin was becoming popular and blooming in some of the European markets. “I could see it coming to India very soon which motivated me to work on creating a brand of premium yet value for money, which will appease those customers who really have a craving for a good Gin and are ready to pay a reasonable price for it. After a lot of work, research and sleepless nights, we zeroed down on the concept and creation of our gin brand which we named ‘Black Jewel’. Our first batch was manufactured on December 18, 2018. Our gin was first amongst the gins produced in Goa as well as first amongst crafted Gins.”
Black Jewel Gin is meticulously hand crafted from hand-picked juniper berries that are grown in the highlands of Italy. These berries along with other botanicals such as Cilantro, Wild Celery, Carum Carvi etc. are infused into the premium grain spirit through a double copper pot distillation. The result is a gin with distinct and remarkable zesty citrus flavour.
For gin to be called gin it needs the juniper as one of its ingredients that is what makes gin unique from vodka. From the perspective of a consumer, herbs other than juniper are a personal preference and palate-friendly. A manufacturer is compelled to compulsorily add Juniper to call it gin, but is free to add the herbs and flavours of their wish, making gin a diverse drink; and this allows the customers to be choosy about their taste and style of gin.
Superior quality of water in Goa
Mac Vaz of Global Spirits and Foods which manufactures Black Jewel Gin states that, besides friendly excise policy, Goa has the perfect water quality for spirit manufacture. “Coming under the Dharwad super group, largely dominated by the laterite rock as its soil which is highly porous and permeable, the quality of ground water is clean and sweet. This, with the heavy rains of nearly 330cm, makes Goa a region with good amount of potable water. We believe water of Goa has its own brand equity.”
On Black Jewel’s reasonable pricing, Sanath Bharne of Sales says, “While there is a general perception that premium pricing has a pull factor with certain Indian consumers, we resisted that suggestion from the trade and came up with an MRP of `675 for 750 ml as we were clear that we wanted Black Jewel to be within the reach of the consumers who are accustomed to regular molasses-based flavoured Gins.”
Liquor manufacturer Radico Khaitan’s performance has been exemplary in these difficult times, highlighted by record sales and earnings. With the expectations of continued earnings and growth, the company is on course to better its performance in these difficult times. The Chief Operating Officer of Radico Khaitan Limited, Mr. Amar Sinha gives an overview of the company’s performance in these Covid times.
Is Radico focusing on premium brown spirits for growth?
Amar Sinha (Sinha): Yes. Radico Khaitan offers a wide array of products – 15 organically-grown brands including 5 millionaire brands – hence, we have something for every age group and in each category. The company, while enhancing the products in the white spirit category, is also focusing on the premium brown spirits while identifying India-specific consumer preferences in the category. In fact, among our successful premium offerings in the brown spirits category, we have 8PM Premium Black Whisky which is a master’s selection for the true connoisseurs of fine taste. 8PM is the flagship brand of Radico Khaitan and 8 PM Premium Black Whisky is a notch above offering which reflects the true essence of quality drinking.
Another essential driver of Radico’s growth in the brown spirits category is Morpheus Brandy (only brandy in the premium and super premium segment) which commands over 65% of the market share in the country. In the rum category, 1965 Spirit of Victory has been doing phenomenally well in the premium rum segment. Our most recent offering, Rampur Indian Single Malt Whisky, which was launched in the Indian market in February 2019 was rated amongst the top 5 world whiskies by “Whiskey Cask Magazine” US even before it was launched in the domestic market.
Which are the new products in brown spirits you are planning to launch?
Sinha: As a country, India has majorly been a brown spirits market. Though people are now open to experimenting more and showing an inclination towards white spirits, the brown spirits segment is continuing to dominate the world over. Of late, there has been a significant shift in people’s consumption pattern with many switching to more premium liquor because they have been mostly home-bound for over a year now which boosted savings to a large extent and that allowed them to move towards premiumisation. To cater to the consumer demands, Radico Khaitan is on course for the launch of more brands in the premium brown spirits space during FY2022 across categories. There are at least 3 Premium Whiskies in the brown spirits category that are currently on the drawing board which would be launched over the next 2 years. These are one segment above each other and with very high contributions in terms of price positioning. Radico has a history of launching at least 12 successful brands in the last decade and half.
What are the plans for 8PM this fiscal?
Sinha: RadicoKhaitan’s primary focus for the brand will be to take 8PM Premium Black Whisky pan India as it is currently available in 16 States. An extension of 8 PM Whisky – a flagship brand of Radico Khaitan – 8PM Premium Black Whisky successfully touched 1 million cases in March 2021, within just 2 years of its launch in the Indian retail market. This brand has been on the growth trajectory paved by its parent brand 8PM Whisky, which itself was a runaway success. It has been named the 5th Best Indian Whisky by the Spirits Business Brand Champion. We have introduced a pocket pack for 8PM Premium Black Whisky in West Bengal, Rajasthan, Telangana, Assam and Uttar Pradesh, which will soon be launched in other markets across the country. This is the first hipster pack in a glass bottle in this segment. 8PM Pocket pack is an innovative 90 ml pack size in look and feel and gives the feeling of a hip flask in glass bottle. The pack is launched to lure the consumer with its modern style and promote trial amongst new consumers.
In this digital age, what is your campaign strategy?
Sinha: While focusing heavily on brand expansion, we will also be launching campaigns with the brand ambassador Tiger Shroff to promote and celebrate the positioning of the brand. The Bollywood actor is extremely popular among the youth and is full of energy and vigour – traits that completely sync with the brand; hence we believe that the launch of the campaigns will further strengthen 8PM Premium Black’s positioning and take it to the next level. We are actively eyeing the digital medium for engaging with the brand loyalists and curating exciting digital campaigns across all social media platforms in order to enhance brand visibility.
The Advertising Standards Council of India (ASCI) banned surrogate advertising of liquor during India’s showstopper event – Indian Premier League 2021 which however, got truncated, due to some players and franchise staff testing positive. Talks are on to hold the unfinished spectacle in the United Arab Emirates, like it did in 2020 without crowd attendance, to be viewed on a broadcast platform.
It was during 2020 IPL that surrogate advertising was active on television and digital medium, particularly OTT (over the top), the latter in the absence of clear guidelines. “The IPL broadcaster for TV has confirmed to the ASCI that all advertisements are checked for CBFC clearance so that they are not in violation of the Cable Television Networks (Regulation) Act, 1995 (CTNR). Keeping that in mind, the ASCI processed complaints on advertisements appearing in OTT, digital and print media,” ASCI said. The association suo motu took up 14 complaints and some of the advertisers withdrew the ads.
Brand extensions have some leeway
The CTNR rules prohibited the direct or indirect advertising of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants in 2009. The Information & Broadcasting Ministry, however, allowed advertisements of products even if they shared a brand name with a liquor or tobacco product so long as it wasn’t a manifestation of the prohibited product. Advertisement of brand extensions of liquor and tobacco products is permitted under CTNR, provided the product sold under the brand extension does not make direct or indirect references to the prohibited product, it is distributed in reasonable quantity and is available in a substantial number of outlets, and the proposed expenditure on the advertisement of the brand extension product is not disproportionate to the actual sales turnover of that product.
ASCI guidelines for brand extensions
The Advertising Standards Council has ‘Guidelines for qualification of brand extension product or service’ wherein for an advertisement to qualify as a genuine brand extension advertisement (by implication, not surrogate), the in-store availability of the product sold must be at least 10% of the leading brand in the product category or sales turnover of the product must exceed `5 crores annually or `1 crore in the state where the product is distributed.
Age-old question, whether to allow liquor advertising or not?
However, the question that keeps raking up is an age-old issue – whether to allow liquor advertising / surrogate advertising or not? And the topic is universal leading to unending debates. Across continents, there are countries where liquor advertising is allowed and then there are as many countries that have banned / restricted advertising of alcoholic beverages. In the United States, spirits advertising has self-regulatory bodies that create standards for the ethical advertising of alcohol. In the UK, advertising for alcoholic drinks follows a code enforced by the Advertising Standards Authority, while the packaging and branding of the products is subject to self-regulation. In Thailand, alcohol advertisements are allowed but with a warning message. In South Korea, public advertising is allowed only after 10 p.m. In the Philippines, alcohol advertising comes with a disclaimer ‘Drink Responsibly’. In India, liquor advertising was banned after the Ministry of Health found that cigarettes and liquor had adverse effects on a person’s health. However, advertisements for liquor brand extensions can run on television only if they have a certificate from the Central Board of Film Certification. That led to the companies (manufacturers and also advertising agencies) becoming innovative with ‘surrogate advertising’ wherein unrelated products with the same brand name is manufactured / advertised and sold, only to ensure that the liquor brand name stays right on top of consumers’ minds. Unrelated products include mineral water, music CDs, soda, sports accessories and anything that can be advertised.
Active on digital media
The question here is when liquor companies are active on social media which is a major influencer, an indisputable force and not to mention its enormous reach, the whole idea of banning on OTT and television smacks of hypocrisy. It is indeed paradoxical that excise which is one of the top revenue earners for most states, going up to 15 % of the overall revenues, is not allowed to be promoted. There is a school of thought that believes if a product is allowed to be manufactured and sold, it should be allowed to be advertised, but that is over simplification as it will certainly be like opening up the Pandora’s Box.Gokul Krishnamoorthy who worked with an agency that handled United Breweries in an opinionated article in the Financial Express says “While ASCI banning surrogate ads by liquor brands during the curtailed IPL 2021 was a welcome move, it prompted a question in many minds. What explains the existence of a team called ‘Royal Challengers Bangalore’? One can’t help but remember that the current captain of the team Virat Kohli is idolised by a young boy in a health beverage commercial, among many others. Royal Challenge is a brand of whisky owned by United Spirits, which also owns the Royal Challengers Bangalore cricket team. If scale of presence, volume of advertising, market share and the likes are the key metrics by which one decides whether or not an alcohol brand can advertise its extension, then Royal Challengers Bangalore has no problem at all.” He goes on to add “The only seeming solution then, albeit rather simplistic and overarching, is that if a brand is present in a category where promotion is banned, it should not be allowed to promote itself in any context. It should be denied the right to promotion, whether for its shared corporate brand, for its extension, for its event, for its cricket team or whatever else.” Since such conundrums exist, there are those who feel that we need to shed this hypocrisy and accept that people do drink and reaching them is a legitimate part of a company’s business plans. The companies should be allowed to promote safe, moderate and responsible drinking. In states where there is prohibition this issue does not crop up at all. With digital media coming into play, some players have been advertising brand extensions as the CTNR does not apply to advertisements over the internet. This is changing as we have seen the government bringing social media under control. The digital medium is pretty nascent and governments are grappling with policies to rein in the medium. Indian liquor companies have been using social media to promote their brands. The UB Group recently tied up with a digital content company which produced a web series titled ‘Pitchers’, a five-part series on four friends trying to launch a start-up. With over 10 million viewers, the show got a rating of 9.7 out of 10 on internet movie database website, making the new concept of advertising, going beyond surrogate advertising. As rules become stricter, liquor brands will look at different channels – events, experiential, branded content and in-film, like ‘Pitchers’. As manufacturers need to advertise, one way or the other as to get their products sold, they have been innovative in how to get the message across.
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:
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.
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.”
Its been a challenging year to say the least for the Alcobev Industry. But with the industry now seemingly heading in the right direction Anmol Gill, Head of Customer Marketing, Bacardi India spoke to Vincent Fernandes and Lopamudra Ganguly on the challenges of 2020, the prospects for 2021 and Bacardi’s Green initiative.
How have Bacardi brands performed in the second half of 2020?
With the festive season ushering in post the lockdown, Bacardi brands have been doing well. There’s renewed optimism as the overall industry is recovering and this has helped increase Bacardi brands’ share in the market. The growth for Bacardi brands has been different across different regions on basis of the occasions that they’re consumed and whether they’re in the High Proof or Low Proof categories.
And in this duration, consumers have become more informed on their knowledge of spirits and cocktails owing to their homemade experiments with cocktails. As on-trade opens up, this will lead to an informed appreciation for bartenders’ skills and greater innovations at bars.
What was your Marketing Strategy during the pandemic?
During the pandemic we kept the consumer at the heart of everything we did, we continued to create moments that matter across brands with their respective cultural passion points of dance, music, comedy and more. We had to remain more agile than ever as consumer behaviour was shifting rapidly and has in many ways changed permanently in this duration. Digital became the consumers’ mainstay as they were looking for avenues to create pre-Covid moments and occasions. Now, it is a part and parcel of the consumer experience, so going forward on-ground and digital experiences will coexist across experiences and campaigns.
As a leader of experiences, our main goal lies in co-curating these new occasions and formats, along with our consumers – understanding how we can meet them at their doorsteps instead of the other way around. Virtual mixology masterclasses, are a great example of the manner in which our brands like Dewar’s and Bombay Sapphire enabled to enjoy their favourite cocktails on a special occasion, when they couldn’t step out to the bar.
Virtual concerts, such as the #HappyAtHome concerts hosted by Bacardí, recreating ‘weekend gigs’ that consumers could enjoy along with their friends, is another creative format where we have adapted to serve what the consumer is craving while staying true to our brand purpose.
How was the response to these marketing initiatives?
All of these campaigns successfully brought alive the brands’ ethos and engaged with the consumers in the formats that they were seeking while also transcending geographical boundaries, enabling access to consumers across the nooks and corners of the country.
How do you see Bacardi faring in 2021?
As the world economy will recover gradually from the pandemic, so will the alcobev industry. With online channels opening up and on-trade beginning to flourish again, I am positive about our brands’ and the overall industry’s growth. The digitization of cultural experiences is here to stay given the successes this year and we will most likely see these coexist with the on-ground activities going forward.
What special initiatives has Bacardi planned this year?
At Bacardi, we identify and leverage consumer insights and needs in order to create any marketing initiative. We explore campaigns and activities where we have an organic fit, a right to play and ones that embody our brand spirit. Thus, with authenticity at the core, we will continue to create moments that matter through platforms, occasions as well as experiences; co-curating them along with our consumers, in formats they prefer.
What are Bacardi’s post-pandemic revival plans?
For us, as part of our BEST10 strategy, Bacardi, globally has been set with the task of making the next ten years the best ones for Bacardi, to become a company known to bring people together for exceptional drinking experiences. As part of this strategy, putting the consumer first and supporting our on-trade channels, especially at this time will be key elements. Our touch points to see this vision through will be authenticity, community and safety.
Authenticity will remain our pillar to build lasting consumer trust. As a family oriented company, we will continue to support communities and partners who’ve been impacted by the crisis. And as safety is crucial, we will continue to build creative but honest ways of ensuring safety.
Do you see the brand sales recovering from the Covid-19 setbacks in 2020?
Yes, I’m optimistic about the future. While distribution in on-trade is still on its path to recovery, we are positive that the new normal will take brand sales in a positive direction. The overall industry is expected to recover fully by the end of the year or early next year.
How do you see the Indian alcobev market recovering from the pandemic?
The growth signs are ushering in recovery in the industry. The channel that now requires innovative solutions to fully make a comeback and grow in the industry is the on-trade business. In this duration, e-commerce opened up for the alcobev industry and it would be interesting to see how it develops in the near future.
How are the Green Projects fairing, especially around packaging? The biodegradable bottles which does not leave behind harmful micro plastics. When is it scheduled to come to India?
In our over 158-year history, Bacardi has always been committed to respecting natural resources and acting responsibly, as well as inspiring consumers and peers to join us in these initiatives. In 2016, we committed to eliminate all single-use plastic straws in our cocktails globally. Now, we’re excited to pioneer the world’s most sustainable spirits bottle which is 100% biodegradable and make a giant leap forward in the fight against climate change and plastic pollution. It will be on shelf globally by 2023 and will replace 80 Million plastic bottles – 3,000 tons of plastic – currently produced by Bacardi across its portfolio of brands every year. Starting with Bacardí rum, the new packaging will be rolled out across the entire Bacardi supply chain and the company’s 200 brands and labels including Bombay Sapphire gin, Grey Goose vodka, Patrón tequila, Martini vermouth and Dewar’s Scotch whisky. We’re looking forward to share this exciting new biopolymer technology with the entire spirits industry.
This revolutionary move is in collaboration with Danimer Scientific, a leading developer and manufacturer of biodegradable products. Petroleum-based plastics used by Bacardi today will be replaced by Danimer Scientific’s Nodax PHA, a biopolymer which derives from the natural oils of plant seeds such as palm, canola and soy. While a regular plastic bottle takes over 400 years to decompose, the new spirits bottle made from Nodax PHA will biodegrade in a wide range of environments, including compost, soil, freshwater and sea water, and after 18 months disappear without leaving behind harmful microplastics.
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.
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
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.
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.
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.
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.
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.