Active Stocks
Wed Sep 27 2023 12:51:07
  1. Tata Steel share price
  2. 127.8 -0.81%
  1. HDFC Bank share price
  2. 1,522.3 -1%
  1. Tata Motors share price
  2. 617.75 -0.32%
  1. Infosys share price
  2. 1,465 0.34%
  1. NTPC share price
  2. 239 -0.5%
Business News/ Industry / Retail/  Liquor sales down 12% in FY21: CIABC

New Delhi: India's strict lockdown in the last fiscal led to a 12% dip in sales of Indian made foreign liquor (IMFL), industry body Confederation of Indian Alcoholic Beverage Companies (CIABC) on Thursday.

Total sale of IMFL in 2020-21 stood at 305 million cases (of 9 litres each); this was nearly 12% lower than the previous fiscal, CIABC said.

States such as West Bengal, Rajasthan, Meghalaya, Puducherry, and Chhattisgarh reported the sharpest decline in sale of alcoholic beverages over the previous fiscal. The CIABC data excluding sales of beer.

India’s lockdown late last March led to closure of most non-essential stores. However, India allowed liquor stores to open up in May as it moved towards a gradual unlocking of the country. States earn significant revenue from excise duty collected from sale of liquor making it imperative for liquor stores to open up.

Though sales picked up in the second half of 2020-21 in most parts, states which imposed high corona cess and other taxes after the first wave of covid-19 showed poor recovery, CIABC said in its statement.

Liquor sales fell 42% in the first quarter of the last fiscal, declining by 9% in the second quarter and 1% in quarter three. Sale of alcoholic beverages recovered grew 6% in the March quarter, the industry body said. For the full year, sales declined 11.6%.

“After an extremely poor first quarter (April-June 2020-21) due to Covid lockdowns, sales showed positive trend on an all-India basis, improving through each quarter, and finally ending the year with a robust performance in the fourth quarter (January to March 2021)," said the apex body of the Indian alcoholic beverage industry.

However, the decline was not uniform across states.

Annual spirts volume sold in India are estimated at 300 million cases of which whiskey is around 200 million cases. Out of 200 million cases , almost 50% is IMFL, Karan Taurani at brokerage Elara Securities said.

Taurani said that for the IMFL industry the full-year decline in sales wasn’t as sharp given one month of April was completely shut and on-premise was shut until November and December. On premise refers to alcohol sold inside bars, pubs and restaurants.

“On premise for IMFL spirits is around 25-40% basis the category. Despite that there has been only an 11% volume decline," he said.

It helps to recall that several states imposed a temporary but hefty corona tax on sale of liquor to deter overcrowding in stores and recover revenue lost due to closure of stores.

For instance, the Delhi Government imposed a 'Special Corona Fees' of 70% tax on Maximum Retail Price (MRP) of the liquor. Other states such as Tamil Nadu, Uttar Pradesh and Karnataka too hiked prices of liquor.

CIABC data suggests that Maharashtra, Goa, Haryana, Himachal Pradesh and Uttarakhand led the recovery in IMFL sales, while West Bengal, Rajasthan and Chhattisgarh reported the largest decline in sale of liquor over the previous fiscal.

“Many states showed positive trend through the four quarters, and even though most states were unable to fully recover volume loss on annual basis due to large loss in first quarter, or in many cases in the second quarter also, strong performance in third and fourth quarters reflects fundamental strength in the market. It also confirms that there is no lasting shift against alcoholic beverages in consumption basket," Vinod Giri, director general, CIABC said.

Some states remained a matter of concern where sales did not pick up or picked up way below national trend, CIABC said in its note, citing states such as West Bengal, Meghalaya, Puducherry, Chhattisgarh, Rajasthan that reported weak recovery.

“Incidentally, majority of these states are ones that imposed high cess / tax during first wave of Covid, and unlike other states did not withdraw or reduce it. West Bengal and Chhattisgarh also made changes in the route-to-market which may have suppressed market’s natural uplift," it added.

Giri added that steps taken by several state governments last year to impose high taxes on alcohol are “greatly misplaced".

“Higher prices on account of higher taxes not only lower-case sales, but they also force consumers downgrade to cheaper options. Thus, tax collection per bottle also goes down, leading to disproportionately higher loss in tax revenues," he added.

"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!

Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Updated: 27 May 2021, 10:13 PM IST
Next Story
Recommended For You
Switch to the Mint app for fast and personalized news - Get App