MCC, and restrictions force drinkers to opt for local liquor brands

With state governments tightening their grip over liquor and Lok Sabha election restrictions creating supply chain disruptions, local brands are flooding the market

Changes in liquor policies and restrictions due to the ongoing Lok Sabha elections are causing an unprecedented shortage of popular brands such as Royal Stag, Budweiser, and Old Monk, The Economic Times reported.

The situation has worsened due to supply chain disruptions caused by the Model Code of Conduct (MCC), resulting in delays in label registrations and licence renewals, the report added.

In response to the dwindling stock of branded alcohol, liquor stores in Delhi are promoting lesser-known whisky brands like 'Party Special,' 'Russian Nights,' and 'O Darling,' which saw sales of 55,000 cases, 30,000 cases, and 20,000 cases, respectively, in April, ET noted.

A similar trend is observed in Andhra Pradesh, where brands like Royal Palace sold 2 million cases, and Daaru House and Old Timer Blue sold 1.2 million cases each in the last financial year. In Telangana, mainstream brands have limited supplies due to payment delays, leading to a rise in demand for local brands.

In November 2021, the Delhi government decided to privatise liquor vending, only to revert to the old policy a year later. This decision left Pernod Ricard, the world's second-largest spirits firm and the largest distiller in Delhi, unable to sell in the state after the authorities refused to renew its licence. This caused a gap in the whisky market in the national capital, particularly affecting mass-premium brands.

In states like Tamil Nadu and Kerala, where liquor retailing is controlled by the government, obscure local brands have long been promoted, forcing top brands to either reduce supply or focus on other markets.

However, what sets this apart is that these states, where the government controls liquor, account for over a fifth of India's alcoholic beverage industry, ET claimed.

The period from March to July is crucial for breweries, representing 40-45 per cent of annual beer sales. Telangana remains the largest beer consumer, while Delhi plays a vital role in brand promotion, especially in bars and pubs.

India's increasing taste for liquor

The restrictions come amid a surge in the country's taste for alcoholic beverages. India's growing fascination with spirits is at an all-time high, driven by a burgeoning middle-class population and a strong preference for whisky. The domestic spirits market has experienced remarkable growth in the last decade, with annual sales rising from 228 million cases in FY11 to 330 million cases by FY18.

Although the market experienced a downturn during the Covid-19 pandemic, with sales dropping to 311 million cases in FY21, it quickly rebounded, adding approximately 100 million cases in annual sales within three years to reach 412 million cases by FY24.

Despite the market's growth rate slowing to 4 per cent in the financial year ending March 31 (FY24), which is a third of the growth rate seen in previous years, the trend towards premiumisation persists, driving value growth across various categories.