Party’s back on for India’s upscale resorts as liquor ban eases
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New Delhi: The Roseate hotel is an oasis of award-winning luxury in acres of gardens just outside New Delhi’s airport. Perfectly situated on one of India’s key tourist drives, its position had been a major turn-off for months.
The Lek Bunnag-designed resort on the Delhi-Jaipur Expressway was among hundreds of establishments subject to a Supreme Court order banning the sale of alcohol from within 500 meters, or a third of a mile, from a highway. The prohibition, implemented on 1 April to curb drunken driving, was partially lifted by the country’s top court on Wednesday, alleviating a five-month slide in business for India’s liquor and hospitality firms.
Liquor stores, restaurants and hotels located within municipal limits — even if they are near a highway — will be allowed to sell alcohol, according to the court’s order. The news sent shares of brewers and distillers up in the world’s top whiskey-drinking market, and promises to revive bookings for embattled hoteliers who watched guest numbers dwindle.
“The ban has a domino effect beyond direct alcohol sales,” said Ankur Bhatia, executive director of Bird Group, owner of the Roseate, in an interview before the court-order led to lost sales of about Rs1 crore ($156,170) a month. Now the company has to invest in marketing and public relations to let customers know alcoholic drinks are back on sale there, he said Thursday. “People tend to think, ‘They don’t serve alcohol there, I won’t even go there.”’
Shares of United Spirits Ltd, controlled by Johnnie Walker Maker Diageo Plc., jumped 4% and Radico Khaitan Ltd. gained 2.1%. United Spirits’ sales fell 8% in its premium-drink segment in the three months ended 30 June. Radico Khaitan, the maker of Magic Moments vodka, said overall sales fell almost 6% during the same period due to the ban.
Prrem Tiwari, managing director at Trident Hotels Pvt., which runs Portico in the city of Pune, said he was forced to close the restaurant and bar as a dip in customers meant he struggled to pay salaries and utility bills.
As many as 80% of all bars in the city, about 150 kilometers southeast of Mumbai, were forced to shut after the ban, Tiwari said.
“I am waiting to open my restaurant” after the government issues a notification, he said over the telephone Thursday. “I had lost around 70 lakh in the last five months.
The prohibition triggered some creative workarounds for some retailers and hospitality businesses. One tavern near Kochi, in the southern state of Kerala, spent Rs20 lakh building a maze-like entrance to lengthen the distance patrons would need to travel from the highway. Some restaurants in Pune and New Delhi closed their front doors and diverted customers to enter via a back entrance sufficiently further away to maintain alcohol sales.
The country had about 485 million people of legal drinking age in 2013. That’s more than the population of the US and Mexico combined. Another 150 million are predicted to join this group by 2018, with the minimum drinking age varying from 18 to 25 across states.
While India’s per-capita alcohol consumption is among the lowest in the world, those who do drink tend to drink a lot. Hazardous boozing — binging and solitary consumption to the point of intoxication — is practised by more than half of the country’s drinkers, according to a 2013 report by New Delhi-based Public Health Foundation of India.
Liquor vendors on highways provide “a potent source for easy availability of alcohol,” and combined with signboards and advertisements hurt safety of drunken drivers and others, the Supreme Court said in its December 2016 judgement.
As much as 21% of people who suffered brain injuries in accidents in India are under the influence of alcohol, while 90 percent of them consumed liquor within three hours prior to the crash, according to a study by the National Institute of Mental Health and Neurosciences in Bengaluru, a copy of which was provided by ArriveSafe. The non-profit filed the initial case that led to the court order.
While welcoming the latest court order, restaurant and hotel owners said they are committed to responsible drinking and discourage driving after alcohol consumption.
“We are not liquor vends,” said Bharat H Malkani, executive committee member of the Federation of Hotel and Restaurant Associations of India. “We are seeking a long-term and comprehensive policy framework that will ensure enforcement of drinking and driving.”
Bird Group’s Bhatia said prior to the ban’s easing that he’d considered investing in properties overseas and was stalling growth plans in India pending a clearer, stable outlook on the country’s alcohol policy. Bloomberg