The 240 million cases Indian Made Foreign Liquor (IMFL) market in which United Spirits from the UB Group dominates, has witnessed a growth of 9 per cent in the April - December 2011 timeframe. This has been pushed into single digits compared to earlier years due to the sharp increase in duties and taxes on IMFL in Maharashtra and West Bengal.
According to official data, in Maharashtra, excise duty and sales tax on IMFL went up sharply effective April 2011 - as a consequence the IMFL industry has contracted by 10 per cent in Maharashtra during Apr-Dec'11. In August 2011, the West Bengal government sharply increased excise duties and compounded it in September by hiking the sales tax rate thereby further pushing up end consumer prices of IMFL. The industry which was growing at 3 per cent during the period Apr-Sept'11 has ended the 9-month Apr-Dec'11 period with a de-growth of 16%; in effect, the industry has degrown by 43% during Q3 (Oct-Dec'11) over the comparable period of the previous year.
Karnataka and Andhra have grown by healthy single digits on a very large base representing nearly 30 per cent of national industry volumes. As is well known, the four Southern States of Andhra, Karnataka, Tamil Nadu & Kerala represent over half the National industry owing to the fact that the Country Liquor has been banned in these 4 states.
Karnataka and Andhra Pradesh, among the top consuming states of Indian Made Foreign Liquor (IMFL), have reported a robust 10 & 9 per cent growth of sales during the 2011. According to official data, while Karnataka saw a total sales of little over 48 million cases, Andhra saw its sales at a little over 44 million cases.
Speaking on the performance, Ashok Capoor, President and Managing Director, United Spirits Limited said: "United Spirits is leading the pack in Karnataka and Andhra. Sales have been robust. While the industry grew at 8 per cent, in both the markets put together, United Spirits sales grew by 16 per cent, for the nine months of this fiscal."
The IMFL industry, a highly regulated sector in which the players cannot pass on the commodity price hikes to the consumers, has also been facing cost escalations in key ingredients such as ENA (extra-neutral alcohol) and also in the glass charges. Many players are looking at multi-substrate options and looking at backward integration to overcome these issues.
