New policy hits liquor trade

Premium liquor brands including Green Label, Diageo's Smirnoff, VAT 69 and Black & White are now off the shelves in Haryana. This is a result of the state's revised excise policy, which the government introduced, that disallowed liquor companies without distilleries in India, to sell their brands in the state.

The industry is now demanding that Haryana Liquor Licence Rule 1970 be amended by the state.

According to the Haryana Liquor Licence Rule 1970, the liquor company is required to have a distillery in India for getting L1B licence for wholesale vend of Indian Made Foreign Sprit for sale to L1 licensee.

This implies that manufacturers who are only blending or bottling products in India will not be given an L1B license in Haryana. With this, companies like Mc Dowell, Sab Miller and Diageo India Private Limited have been refused the L1B licence for this fiscal.

However , by paying double the duty for L1B licence, the company can sell its brands as per Haryana Liquor Licence Rule 1970. For selling more than 25,000 cases the duty for one financial year amounts to Rs 10 lakh in the state.

Manufacturers of these liquor brands term the amendment sudden and abrupt, creating an unfair marketplace with differential treatment being given to companies.

Speaking to Business Standard in Chandigarh today, S.Ramakrishna, corporate relations director, Middle East and India, Diageo India Pvt Ltd (the Indian subsidiary of global liquor major Diageo) said a representation to the state government had been made and for now the commercial decision of giving double the duty was being considered.

"This year we were expecting to sell more than 25,000 cases in Haryana itself and we have already lost two months ," he said.

Diageo India Private Limited currently has a market share of 15 per cent in the premium brand segment (the price of whiskey and vodka bottle is above Rs 350) in Haryana state.

Ramakrishna further added that the amendment of the Haryana Liquor Licence Rule 1970s rule was in the interest of the state government, consumers and the company.

"It will likely trigger cross border trade, as consumers in Haryana will start sourcing their liquor from neighbouring states like Delhi and Punjab where these brands are available," he added.

Industry sources point out that the demand of the India market is only 1,200 million litre alcohol, as compared to the current installed capacity of about 3,200 million litres in India. There is a stark 40 per cent under-utilisation of the distilleries across India.