The New Cheerleader

They are calling it the time of Bacchus. Cocking a snook at the global recession and dismal industrial growth figures, a pub opens every week in some corner of Delhi, where liquor sales—thanks to competitive pricing and seductive sops—are on a perpetual high. That apart, the Delhi Tourism and Transport Development Corporation (DTTDC), which distributes liquor in the Capital, will now modernise liquor vends to help boost the merrymaking. Says dttdc chairman Rajiv Talwar: "People need to pick up their things fast, rather than jostle in queues."

In Andhra Pradesh, the government makes less money from its much-hyped infotech industry than from excise on liquor sales (in which it tops south India): Rs 2,200 crore in taxes on Rs 16,000 crore of sales. While his Cyberabad dreams are well-known, what is less ballyhooed is CM Chandrababu Naidu's plan to open a whopping 31,000 liquor vends in the state over the next two years. The Hyderabad-based Women's Group of Empowerment estimates that soon Andhra will be the first state to have at least two liquor shops in each village.

In Maharashtra, the state government is contemplating further reducing sales tax charged on liquor served in permit rooms of hotels and restaurants, thanks to persistent lobbying by the Maharashtra State Hotel Owners' Association (MSHOA). That should help sales too.

If there's one Indian manufacturing industry that's hiccuping happily in these troubled times, it's liquor. Says Bacardi-Martini India CEO Jayant Kapur, "Social drinking is more acceptable, both in good and depressing times. And restaurants, bars and pubs are offering highly attractive rates to boost sales." Agrees food connoisseur and liquor expert Rocky Mohan: "Unwinding with a mug of beer or a glass of whisky is probably the best way to enjoy. And also to drown your sorrows. Tension levels are high. The markets are low. And there's depression in the air. Look at the pubs: they are all heavily crowded, both during and after happy hours, with people from all age groups."

While international brands like Johnnie Walker Red Label whisky (down by 1.5 per cent), Smirnoff vodka (down by 2.5 per cent) and Bacardi rum (down by 6 per cent) posted negative growth in global sales, several Indian names figure in the 2000-01 tally of the 109 million-cases-a-year brands in the world. The Rs 17,000-crore industry grew by 16 per cent, with the sales of United Breweries' McDowell's No. 1 brandy jumping by 40.5 per cent (3.4 million cases) and Celebration rum by 34 per cent (about 2.3 million cases).

Our new acquisitions will help us further augment growth in the beer segment (70 million cases) where we already have the largest (40 per cent) share. In fact, we had only 5 per cent growth this year compared to 9 last year. But if the state duties are rationalised, we could have a better scenario," remarks UB (beer division) executive director Shekhar Ramamurthy, adding: "The pub culture spreading across the country is helping us grow sales."

For the premium segment—which constitutes barely 5 per cent of the market—there could soon be good news if the revenue department of the finance ministry and the food processing ministry reduce duties on imported alcohol (currently raging from a high 246 to a lethal 706 per cent). Besides continued lobbying by international liquor majors, ministry sources admit there's a need to build Indian brands for foreign markets (primarily beer and whisky in the Asian continent, to start with).

"The industry growth is primarily being driven by some key brands in certain segments. But there's a crying need for duties and taxes to be rationalised on imported spirits and wines—the Indian consumer should have legitimate access to genuine products at reasonable prices. After all, the government undoubtedly realises that high tariff barriers are helping only grey-market operators," says Mohan Shukla, Seagram India corporate affairs director.

Encouraged by the prospects, international majors have set up manufacturing operations in the country. For example, Guinness UDV—besides marketing Johnnie Walker whisky—has two facilities that make Green Label whisky, Smirnoff vodka and Malibu rum. Seagram manufactures gin and whisky while Foster's of Australia makes beer.

Adds Abhijit Sanyal, COO, Guinness udv India: "If the long-awaited duty rationalisation on imported liquor happens, it is but expected that the market will grow faster. The consumer offtake of imported liquor is directly dependent on the price differential between the official retail price and the grey-market price. As this gap reduces, this segment will grow faster and bootlegging may even become unviable." That would bring more cheer(s) to the industry.