Delhi’s liquor companies wary of supply crisis

Under the Delhi government’s plan to bring a new excise policy, private liquor shops in the country’s capital have had to shut shop from September 30. Though the government-run shops will remain open to meet the festive season rush, they too will be closed from November 17. The impact of the disruption will last for at least the next 45 days.

Liquor makers, especially those selling premium brands, are worried that changes in the new excise policy in Delhi will hit sales ahead of the festive season. He said the shift is already hurting sales.

Under the new liquor policy, all 850 liquor shops, including 260 privately run shops, have been given to private firms through an open tender process. The new license holders will open shops on November 17. With the new policy, the Delhi government will come out of the liquor business by closing government shops in the national capital.

While the state has directed state-owned liquor shops to be fully stocked, liquor makers said they anticipate early issues and shortages.

“Delhi was one of the least-served markets even before these shops were closed. Beer Cafe founder Rahul Singh said many consumers looking to shop for personal consumption will be in trouble till Diwali.

Private sellers, who stock premium brands and offer a wide assortment of products, contribute over 60% of the turnover of many alcoholic beverage firms. According to industry officials, over 475 government-owned retail outlets will be served at Delhi’s IMFL or Indian Made Foreign Liquor Market during the six-week transition.

“The turnover of government shops is about 40%; 60% was coming from private shops. So that’s 60% gone, and I don’t think anyone will be able to shift those sales entirely to government stores as their ability to ramp up stock will be limited,” said Vinod Giri, director general, Confederation of Alcoholic Beverages of India Said Companies (CIABC), a lobby that represents domestic liquor companies, including Allied Blenders and Distillers, Amrit Distilleries Globus Spirits and Radico Khaitan.

In a letter to the state government last month, the lobby flagged product shortages and long queues at liquor shops in the capital ahead of the festive season due to the infection.

The CIABC also highlighted the absence of a stock transfer mechanism in case of stock leftovers at government-run shops as they too will be closed from November 17. The supplier, it said, would “hesitate” to supply the products and create fresh bad credit risk.

A spokesperson for Diageo India, producer of Johnnie Walker and Smirnoff, declined to comment.

Abhinav Jindal, founder of Kimaya Himalayan Beverages, which brews Be Young and Yveera beer, sees trouble ahead. With fewer store operations, brands cannot perfectly match supply, and they expect disruption. “Last year’s festive season was also hit hard by the pandemic. We are still confident that we will come out positive, although we will not be able to achieve 2019 figures.”

He added that most of the big manufacturers have tie-ups with government-run shops, so changing it may not be difficult.

“The timing is definitely not great, but we were prepared,” said Anand Virmani, co-founder and CEO of Now Spirits & Beverages, which sells gin brands like Greater Than and Hapusa.

The company has moved to pay-and-play model. “We are not extending credit. You don’t want to get stuck in a situation where you have given stock 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 top three markets.

Another executive of a foreign liquor firm, speaking on condition of anonymity, said there would be initial issues. The company, which usually does not stock its premium alcoholic beverage brands at government vendors, said it will now have to redirect the stock to such outlets. “There is going to be a supply crunch, and many people are going to rest in Noida and Gurgaon,” he said.

However, companies feel that the new policy, once implemented, is a welcome move.