Covid effect: Indian liquor sales likely to decline 35-40% this year

Covid effect: Indian liquor sales likely to decline 35-40% this year

Indian liquor sales are likely to fall by 35-40 % in the current year in volume terms due to the Covid cess and the ban on on-premise sales in bars and restaurants, Deepak Roy, chairman of Confederation of Indian Alcoholic Beverage Companies (India) and former executive vice-chairman of Allied Blenders and Distillers, said.

There will be some recovery as economic activities pick up, but unless there is a correction in price, overall sales of liquor will be sharply lower, he added. India is reported to be the third-largest liquor market in the world with an annual value of $35 billion. In whiskey, India is seen as the largest market.

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“After the lockdown was imposed right from middle of March, the liquor business came to a standstill, including on-premise business. April was completely closed and from May 15 some business activity started. But state governments started imposing Covid cess on liquor sales and in some cases, it went beyond 60-70 %, and sales started declining,” he said.

Roy pointed out that any sudden increase of more than 10-15 % in prices of liquor has a very crushing effect on consumption. On-premise consumption in bars and restaurants is a vital part of the industry and seen critical in the overall demand. Liquor sales declined by 45% last month, which is huge by industry standards, Roy said.

Globally too, consumption of liquor and spirits will see an overall decline of 15% due to the restrictions on on-premise consumption, Roy said. However, he is hopeful that consumption of Indian whiskeys will pick up for the full year, but exports could be a tad lower than last year due to the pandemic-related constraints.

On the supply side, Roy said factories are slowly coming back on track. “Factories were badly impacted due to the lockdown. Logistic issues and short supply of bottle affected production. In another four weeks, the supply side will be back to normal.”.

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