Covid-19 impact: Liquor stores may face dry days ahead

Bengaluru: Cheers accompanying the reopening of liquor stores could be short-lived as companies said existing stock at distributors will be exhausted after the initial round of stockpiling and replenishment could take a month or so.

“The new guideline is a step in the right direction but we cannot beat the drums yet. Pipelines are dry as distilleries have been shut for over a month. Restoring the supply chain will take three-six weeks,” said Deepak Roy, executive vice chairman of Allied Blenders & Distillers, the maker of Officers Choice whisky and chairman of the Confederation of Indian Alcoholic Beverage Companies (CIABC).

While the Ministry of Home Affairs (MHA) has permitted sale of liquor in the third phase of the Covid-19 lockdown starting Monday, companies are still awaiting clarity from state governments, especially for red zones. As per the MHA guideline, retail of liquor, paan and tobacco is permitted in green and orange zones and non-containment areas in red zones, while ensuring a minimum six feet of physical distancing.

“Since it is also the peak harvest season, priority will be given to the movement of agricultural crops,” said Roy.


Most Bottling Units Outside Red Zones

However, most bottling units are located in semi-urban and rural areas, mostly not in red zones, reducing some pain on the transport side, he said.

There are about 70,000 liquor outlets across the country. The government has said 319 districts are in the green zone, 284 in the orange zone and 130 in red. Companies expect states such as Assam, Karnataka, Punjab, Uttar Pradesh and Haryana to start retailing before others like Maharashtra, where infections are high.

“We will see a big challenge in social distancing on the bottling line. Karnataka has permitted only a single shift for distilleries. Production will thus meet only 50% of the requirement in the initial days,” said Rakshit Jagdale, managing director of Amrut Distilleries, which expects large pack sizes to sell more due to panic buying.

Sorting out the supply chain challenge to combat the spurious liquor trade is the core plan for the days ahead, according to Radico Khaitan, the maker of Magic Moments vodka and 8PM whisky.

“Opening retail will prevent the flow of tainted liquor, bootlegging and the loss of state government revenue,” said COO Amar Sinha. “Liquor industry contributes 15-30% revenue to the state governments.”

Breweries are trying to determine the demand level as leftover stock in the market was impacted by the rise in blackmarket trading during the lockdown. “We will be able to retail in close to 400 districts but we will need 14 days to restart supply and a month to recover,” said a senior official at a global beer maker on conditions of anonymity.

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