Changes in state liquor policies are leading to an unprecedented shortage of popular brands such as Royal Stag, Budweiser, and Old Monk. This shortage is exacerbated by the code of conduct for the general election, causing disruptions in the supply chain and delays in label registrations and license renewals.

In Delhi, liquor stores are promoting lesser-known whisky brands such as ‘Party Special’, ‘Russian Nights’, and ‘O Darling’, which collectively sold 55,000 cases, 30,000 cases, and 20,000 cases respectively in April. Similarly, in Andhra Pradesh, whisky brands like Royal Palace recorded sales of 2 million cases, while Daaru House and Old Timer Blue each sold 1.2 million cases in the last fiscal year. Meanwhile, in Telangana, mainstream brands are restricting supplies due to payment delays, prompting a rise in local brands.

“Although the model code of conduct is intended solely for new policy announcements, the reality is that in certain states, it’s being cited as grounds to impede or prolong routine approval processes. License approvals are experiencing excessive delays in states like Delhi, routine production shift approvals are being withheld in Telangana, and payment cycles from corporations are being delayed, among other issues,” stated Vinod Giri, Director General of the industry body Confederation of Indian Alcoholic Beverage Companies.

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“We acknowledge that some delays may stem from staff shortages due to election duties, but this explanation doesn’t suffice for areas where elections have concluded or are weeks away. It appears that bureaucratic apathy, compounded by election-related disruptions, is significantly impacting the industry’s supply chains,” commented Giri.

In November 2021, the Delhi government opted to withdraw from the liquor vending business, transferring it to private companies. However, a year later, it reverted to the previous policy. Pernod Ricard, the world’s second-largest spirits firm and the largest distiller in Delhi, faced restrictions on selling in the state as its license was not renewed by authorities. This led to a vacuum in the whisky segment, particularly affecting mass-premium brands.

“For customers, the current focus is on accessibility rather than choice. Additionally, these lesser-known smaller brands provide retailers with margins more than double ours, making it profitable for them to promote them. Although there’s a noticeable disparity between our supply and demand in these states, we rely entirely on excise officials to address such malpractices at the retail or wholesale level,” stated a senior official from a major liquor producer. “In certain states, we are avoiding from stocking up deliberately because any shift in the state government could potentially result in payment disputes or delays.”

This scenario is not novel for the alcobev sector. States such as Tamil Nadu and Kerala, which regulate liquor retailing, have long promoted local lesser-known brands, compelling top brands to either reduce supply or redirect attention to other regions. What sets this situation apart is that these states, where the government controls liquor sales, represent more than a fifth of India’s total alcobev industry.

The period from March to July marks the peak season for breweries, constituting 40-45% of annual beer sales. Telangana stands out as the largest beer consumer, whereas Delhi plays a pivotal role in brand building, particularly in bars and pubs.

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