Liquor industry pinning hopes on home delivery for business revival

By: |
Published: May 15, 2020 1:01 AM

Home delivery will also allow brands to establish a wider distribution footprint quickly.

Home delivery will also allow brands to establish a wider distribution footprint quickly.Home delivery will also allow brands to establish a wider distribution footprint quickly.

After more than a month of lockdown took the fizz out of liquor sales and as the push for home delivery of alcohol gains ground — a few states including West Bengal, Maharashtra and Chhattisgarh have already taken the lead — companies are pinning hopes on online sales to cushion the blow.

Amrit Kiran Singh, executive chairman at ISWAI (International Spirits & Wines Association of India), told FE at least another four to five states are working on policies to enable home delivery of alcohol and could implement this in the near future. However, given that nearly 25% of the industry’s revenue comes from bars, delivery will help in doing retail business with social distancing, but may not substantially help in recovery.India sells 340 million cases of spirit, 330 million cases of country liquor and beer each annually, according to ISWAI.

Javed Murad, founder of craft beer maker White Owl Brewery, said home delivery of liquor is a critical step towards salvaging the business, at least in the medium-term, as normalcy is certainly not on the horizon for the next six to nine months. Assuming that the lockdown is completely lifted in phases over the next four to six weeks, the peak season will already be lost. “Moreover, the entire restaurant/bar channel that thrives on social interactions will be handicapped until we have availability of some sort of a vaccine,” Murad said.

Home delivery will also allow brands to establish a wider distribution footprint quickly.

For Simba Craft Beer, home delivery has picked up well. Founder & CEO Prabhtej Singh Bhatia said Chhattisgarh is generating about 20% of company sales. Bhatia, however, is wary of the fact that consumption may take a hit due to the hike in excise duty. “The increase in duty should be a temporary move and reversed post the lockdown,” added Bhatia.

Sachin Mehta, country director at William Grant & Sons, India, said the firm is more than willing to align its supply chain and pivot to a consumer-led model. Home delivery will facilitate consumer access to preferred brands like Grants and Hendricks, Glenfiddich and Monkey Shoulder.

Aman Thadani, founder of Woodburns Whisky, said the primary focus will remain on digital audiences now more than ever. “Companies like Zomato and Swiggy are keen to kick off delivery through their apps,” Thadani said.

In fact, HipBar, a payments and delivery facilitating company for the alcobev industry that had home delivered alcohol in Bengaluru in 2017-18, said it has submitted operating models to various states and is ready to go live in accordance with the state regulations.

Surya Phadke, MD at premium wine-maker Quale Magni, said states like WB and Chhattisgarh have allowed home delivery via an app and web portal. In future, if states allow aggregators like Swiggy and Zomato to deliver alcohol, it will be a rational step as the firms have scale and expertise in contactless delivery.

Business strategy would definitely be to go more aggressive on digital space and increase visibility, said Abhay Kewadkar, MD at Tetrad Global Beverages that makes handcrafted label of wines. After the shops reopened, demand has been good but it cannot compensate for 50 days of lost business. Mitigation of impact could at best be 10%-20%, Kewadkar said.

Yugantar Saxena, operations head at Bad Monkey Beer, said business strategy would not be centred around online sales only, rather it will be an additional vertical. “With only a fraction of shops authorised to open and beer having a limited season, the picture is not too rosy for beer makers,” Saxena said. Medusa Beverages said the beer industry will see a decline of sales by 35%-40% this financial year.

Though Abhinav Jindal, CEO & founder at New Delhi-based Kimaya Himalayan Beverages that makes Yavira beer, believes that it will be prudent for companies to have an alternate sales channel, smooth facilitation of the delivery will be a challenge. Policies to avoid pilferage and adulteration at the retail level should be put in place. Authorisation in terms of legal drinking age for consumers is needed.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Why don’t banks cut lending rates after RBI repo rate cuts? Well, they do, only some time later
2ED attaches over Rs 2,200 crore assets of Rana Kapoor, others in Yes Bank PMLA case
3Microsoft India appoints Navtez Bal as Executive Director for public sector unit