Liquor sales on a new high in UP

Thanks to the elections of the grass root demo cratic institutions, the three-tier panchayat institutions in Uttar Pradesh, the state has registered record consumption of country liquor in the calander year ended December 2005.

The consumption of country liquor has risen, despite huge investments in Indian Made Foreign Liquor (IMFL). The growing preference for this category of alcohol among the middle class is primarily due to a general rise in disposable income and health awareness.

The alcohol market in UP is witnessing a radical change, with distilleries engaged in the production of country liquor being driven out of the ma rket by new units of IMFL units. Howevr, country liquor has managed to retain and even better its share in the market.

The consumption ofcountry liquor has grown by about 11 per cent in 2005 compared with an 8.2 per cent rise in the IMFL. Till December 2004, the consumption of country liquor was 13.21 crore litres, which rose to 14.65 crore litres in December 2005, while the consumption of IMFL till December 2005 was 3.84 crore bottles, compared to 3.55 crore bottles in December 2004.

The sales of beer recorded 15 per cent increase, as 3.89 crore bottles were sold by the end of December 2005.

According to the excise department, trends in first quarter of the current fiscal and fresh investment in IMFL sector indicated that the consumption of country liquor was declining and drinkers were fast migrating to IMFL.

The new UP excise policy for promoting investment in distilleries has also sparked off the process of shake up in the liquor industry. Existing small distilleries producing country liquor are either closing shop or changing hands following the new policy fixing c ap of a minimum investment of Rs 100 crore.

India Glycol of Bharatiya group is setting up a distillery in Gorakhpur for IMFL, while Vam Organics - now known as Jubilant Organysys "" was exploring the possibility of establishing potato-based distillery in the Potato belt of Kannauj and Etawah. The Bajaj group likely to emerge soon as the single largest private sugar producer in India is also in the process of setting up a distillery for producing IMFL.

The biggest player in potable alcohol industry, the Vijay Mallaya group is also expected to invest in UP.

Official sources said only those producing quality liquor, both CL and IMFL, would survive and the UP government was not interested in regulating the process as market forces would decide the fate of the industry. As many as 26 distilleries have obtained licenses and most were not utilising their capacity for various reasons. Of the 26 distilleries, 21 had mixed license for producing industrial and potable alcohol, while five were exclusively for IMFL. The IMFL distilleries on the hand were utilising 100% of their installed capacity. IMFL distilleries like McDowell, Radico Khaitan, Seagram and Mohan Mekins were doing well in the market since they were producing quality alcohol which was competing in the national market. Against the licensed capacity of 2,250 Lakh liters, the total production by 26 distilleries was only 1,400 Lakh liters per annum. Of the total installed capacity of 2,250 Lakh liters, the share of IMFL distilleries was only 25 per cent.