Delhi liquor companies wary of supply crisis
Private sellers of alcohol in the nation’s capital had to close their doors from September 30 as part of the Delhi government’s plan to introduce a new excise policy. Government-run stores will remain open to respond to the holiday rush, however, but they too will close from November 17. The impact of the disruption will last for at least the next 45 days.
Liquor makers, especially those selling premium brands, fear the transition to Delhi’s new excise policy will kill sales before the holiday season. The change is already hurting sales, they said.
Under the new liquor policy, the 850 liquor stores, including 260 private outlets, were awarded to private companies through an open tendering process. The new licensees will open stores on November 17. The new policy will see the Delhi government withdraw from the alcohol business by closing state stores in the nation’s capital.
While the state has ordered government-owned liquor stores to be fully stocked, liquor makers have said they anticipate start-up problems and shortages.
“Delhi was one of the least well served markets even before these stores closed. There will be problems until Diwali for many consumers who wish to buy for their private consumption, ”said Rahul Singh, founder of Beer Cafe.
Private sellers, which stock premium brands and offer a wider assortment of products, account for over 60% of the business of several alcoholic beverage companies. During the six-week transition, Delhi’s IMFL or India-made foreign liquor market will be served by more than 475 government-owned retail outlets, according to industry executives.
“State stores represent almost 40% of the activity; 60% came from private stores. So 60% are gone, and I don’t think we can fully transfer these sales to government stores as their ability to increase stocks will be limited, “said Vinod Giri, director general of the Confederation of Indian Alcoholic Beverages. Companies (CIABC), a lobby that represents national alcohol companies including Allied Blenders and Distillers, Amrut Distilleries Globus Spirits and Radico Khaitan, among others.
In a communication to the state government last month, the lobby reported product shortages and long lines at liquor stores in the capital ahead of the holiday season due to the transition.
The CIABC also highlighted the lack of a stock transfer mechanism in the event of remaining stock in government-run stores, as these too will be closed from November 17. Suppliers, he said, will be “hesitant” to supply products and create new bad debt risks.
A spokesperson for Diageo India, the maker of Johnnie Walker and Smirnoff, declined to comment.
Abhinav Jindal, founder of Kimaya Himalayan Beverages which makes Bee Young and Yavira beers, sees difficulties ahead. With fewer stores operational, brands cannot fully match the offering and they expect disruption. “Last year’s holiday season was also hit hard by the pandemic. We still think we will come out positive, although we may not hit the 2019 numbers, ”he said.
Most of the major manufacturers have ties to government-run distributors, so it may not be difficult to make the transition, he added.
“The timing is certainly not ideal, but we were prepared,” said Anand Virmani, co-founder and CEO of Nao Spirits and Beverages which sells gin brands such as Greater Than and Hapusa.
The company has moved to a payment and play model. “We don’t give credit. You don’t want to be stuck in a situation where you’ve given stocks on credit. And the next time you go back to the store and the store isn’t there, ”he said. For the company, Delhi is one of its three main markets.
Another executive from a foreign liquor company said on condition of anonymity that there would be youth issues. The company, which does not typically stock its premium alcoholic beverage brands in government stores, said it will now need to redirect inventory to those outlets. “There is going to be a shortage of supplies and a lot of people will be running to Noida and Gurgaon for resupply,” he said.
However, businesses believe the new policy, once in effect, is a welcome initiative.
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