Recently, the Delhi government announced the new Excise Policy 2021-22, while calling the existing liquor policy ‘archaic’ and ‘cumbersome’. Some of the new measures included in this policy included creating walk-in experience for customers at alcohol shops, promoting microbreweries and extending the timing of bars in hotels, clubs, and restaurants.
The government took these steps to boost excise collection, which is amongst the largest revenue contributors. This channel’s revenue generation is currently at a sub-optimal level, and excise from the sale of alcohol is just around 5%, according to a report by a special State-Committee. It also indicated that Delhi’s excise revenue generation is much lower than that of Uttar Pradesh and Karnataka.
Siddharth Banerji, MD, Kyndal Group noted that in 2019-20, the state government earned INR 6,574 crore from liquor, which is about 9.5% of the total estimated revenue, as mentioned in the budget, of INR 69,000 crore. In 2020, COVID-19’s outbreak and subsequent lockdowns affected liquor sales.
Banerji told Vinita Bhatia that the liquor industry is still on its road to recovery, though, January-March 2021 showed an upward trend. In 2020, India’s alco-beverage market recorded $18,791 million revenue in the whiskey segment, with projections of 8.5% CAGR (2020-2023).
In 2020, India’s alco-beverage market recorded $18,791 million revenue in the whiskey segment, with projections of 8.5% CAGR (2020-2023).
What is the approximate annual alcohol consumption in Delhi?
According to India’s Health and Family Welfare Statistics (HFWS), Delhi is at number three when it comes to liquor revenue share with 12% of tax revenue. However, citizens of Delhi consume only 4% of the national intake. The report also indicates that 12 states – the five southern ones, Delhi, Punjab, Uttar Pradesh, West Bengal, Madhya Pradesh and Rajasthan – account for 75% of total liquor consumption in the country.
According to the latest data by IWSR Drinks Market Analysis, total sales volume crashed about 29% to 474 million cases (of 9 litres each) in 2020, from 668 million in 2019. The industry has been flat since 2014, with alcohol volumes in India showing only 6% growth. The pandemic induced strict lockdown further led to a 35-40% dip in the business with a 15% decline in consumption, globally.
The Delhi government amended the Delhi Excise Rules recently to allow home delivery of liquor. What prompted this move?
India is the third-largest and fastest-growing liquor market in the world. Owing to the high-growth potential and increasing social acceptance, the alco beverage industry is considered as a sunrise industry. Considering the liquor market is a heavy revenue generator for further development in those areas, several states are revising the policies for liquor sales.
This is why more states are permitting mall shops and premium shopping experiences to create transparent and safe consumer experiences. Thus, Delhi Government’s recent announcement is a step owing to the Supreme Court’s suggestion to consider home delivery to avoid overcrowding at retail outlets.
How will these moves help in inequitable distribution of alcoholic beverages amongst retail vendors?
Delhi Government’s recent amendment for permitting home delivery of liquor is a step towards the liberalisation of the distribution structure for providing a safer and more premium experience to the consumers. However, it is early to comment on this, as we are yet to receive comprehensive details of the guidelines.
In Kolkata, consumers can place orders for alcohol on private online delivery platforms, while in Maharashtra retail shops in some areas deliver locally. Why has the Delhi government stated that consumers will have to use mobile applications or web portals to place their orders?
Every state has its regulatory framework and the alco-bev segment has to adhere to these by accommodating specialised attention to every single market’s requirements. Keeping in mind the swiftly changing consumer and industry needs, the Delhi Government has made amendments to the liquor sale policies.
Microbreweries should have L-7V and L-7SP1 license to avoid illicit and indirect sale of alcohol
Will the state develop these apps or portals or can retailers, microbreweries, bars, and restaurants develop this tech indigenously?
Before the recent advisory shared by the Government, there was a provision for home delivery of liquor, but specifically for orders received through fax and emails. However, several retail shops were unable to adopt this method of delivery.
Therefore, to provide easy access to the liquor vendors, the government has suggested amendments in the rules and advised to include feasible methods for ordering through mobile apps or online web portals as well. The recent announcement by the Government mentions that retailers, microbreweries, bars and restaurants can also develop the websites or apps. However, the state government has not yet issued specific details on the same.
Should the Delhi government instead have allowed all licensed liquor retailers to proceed with home delivery by working with third-party online delivery platforms?
Before proposing the new amendments to the policy, the Government tried and tested several methods to facilitate ordering liquor online, for instance, a token system in Delhi and Pune to prevent crowding in liquor stores during the pandemic. To implement a successful chain of online delivery of alcohol, several things need to be considered and practiced. This majorly comprises improving safety and security measures to prevent minors from purchasing alcohol, promoting global standards as a resource to establish national-level regulations and practices for the online purchase and sale of alcohol.
Also, it is imperative to consider that easy access of alcohol is detrimental to the vulnerable members of the society who are living with mental health issues and substance abuse disorders. Therefore, this amendment is still an idea that will need clarity as we await the policy details, which will share light on everyone’s questions.
Microbreweries need the L-7V/L-7SP1 licence to procure products from L1 distributors and supply them to bars and restaurants. Do most of them have this license?
Liquor licenses in India could be a tedious process, considering India’s unique regulatory framework coupled with the regional sensibilities. Each microbrewery has to choose an L-1 distributor, who would be responsible for any off-premise sale. They shall be authorised to supply to other restaurants and establishments that have L15, L-16, L-17, L-19, L-20, L-21, L-28, L-29 and L-38 licenses.
The government insists on having an L-7V and L-7SP1 license for showcasing or branding liquor in retail vends in specific zones. It is recommended that microbreweries should have this license to avoid illicit and indirect sale of alcohol. The licence is easy to procure and the cost of obtaining the license varies from state to state considering the plethora of direct and indirect taxes.
Are beverage brands helping retail vendors in getting the L-13 license for Indian liquor or L-13F for foreign liquor licence?
According to the Government’s recent guidelines, The L-13 licence is for home delivery of Indian liquor and foreign liquor via a mobile app or online website. Only if the request is obtained via the mobile app or online web portal will the licensee deliver liquor to the households. The L-13 license is under formulation, and the details are yet to be revealed.
