 "Nitish Kumar (Photo: Facebook)")
Bihar on Tuesday became a dry state and Chief Minister Nitish Kumar said the production of liquor would not be encouraged.
"We will not encourage the production of alcohol now. The breweries will now have to decide on this. After this decision, there is no market for alcohol in the state. They can sell their products to other states. We cannot encourage liquor industry. If they want, they can move out of the state," he said.
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Country and composite liquor was already prohibited in rural areas across the state since April 1. With this ban, Kumar has fulfilled his election promise. "In the first four days after banning country liquor, it has become a social movement. Even in cities, women started opposing government-run shops selling IMFL. And so I feel this is the right time for social change in Bihar," said a visible happy chief minister, as he emerged after a two-hour Cabinet meeting.
No alcohol can be legally sold, bought or consumed, including at bars and restaurants in the state. The chief minister said no new liquor licence would be given. Army cantonment areas would be exempted from the rule as the sale and consumption of alcohol there is regulated by their mechanism, the chief minister said. He said neera (a drink made of sap from palm trees before sunrise) would be allowed, while toddy would be barred.
The announcement in Patna came as shock to liquor companies, especially those with units in the state. Cobra and Carlsburg have plants near the capital. United Spirits is constructing a beer-bottling plant near Patna. Most company officials concerned refused to comment. However, some confirmed on conditions of anonymity that it would force senior management to take harsh steps, including shutting down of factories.
Analysts said the ban would have little impact on domestic liquor sales as the state was a small contributor in this market. However, they said it would have a negative sentiment as more states could follow suit to attract women's votes.
The move would have far-reaching implications for IMFL manufacturers, notably the top three - Diageo-owned United Spirits (USL), French major Pernod Ricard and Kishore-Chahhabria-owned Allied Blenders and Distillers (ABD). The three firms control almost 70 per cent of the six-million-case Bihar market, valued at Rs 1,500-2,000 crore.
While USL and Pernod Ricard are estimated to have a share of 30 per cent each of the Bihar IMFL market, ABD has a 20 per cent market share. Popular IMFL brands include McDowell's No 1 and Bagpiper from USL, Imperial Blue and Royal Stag from Pernod Ricard and Officer's Choice from ABD, respectively.
Deepak Roy, executive vice-chairman of ABD, said, "We have crores worth of material lying at the godown for which excise has already been paid. All of this will become redundant with the ban kicking in. We were hoping to start the new financial year with a bang and look what has happened. Forget the loss of business due to the ban - that is one aspect. Finished stock lying at the godown unable to be shipped out has hit us hard."
USL and Pernod Ricard could not be immediately reached for their comments.
Manufacturers privately admit that a blanket ban will fuel the illicit liquor trade, impacting the health of people. "I don't know how effective this is going to be. I find the move counter-productive," said an executive with a liquor major.
The chief minister, when asked about the fate of liquor manufacturing companies and factories in the state, said they could continue manufacturing but cannot trade. "Besides, they have to abide by rules like having a digital locking system and GPS monitoring equipment in vehicles transporting the liquor manufactured at outlets in Bihar to places outside the state for sale," Kumar said.
Bihar, Gujarat, Nagaland and Manipur have total prohibition, while Kerala has been implementing a ban in a phased manner.
While Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Punjab and the Union territory of Delhi are big consumers of IMFL, Bihar (prior to the ban) figured in the top 10 markets, experts said.
Bihar had earned Rs 5,300 crore from liquor sale for the financial year ended March 31. This year, with a ban on country liquor, the state government had aimed at earning almost Rs 4,000 crore from the sale of Indian made foreign liquor.
Prohibition was a key electoral promise Kumar had made to women voters in the run-up to last year's Assembly elections. Many political analysts said this had played a pivotal role in his returning to power.
"The support to our call for a ban alcohol was tremendous. There was a huge clamour for a ban on liquor. This shows that our move has created a clean and great environment for complete prohibition. Therefore, we feel that the time for complete prohibition has arrived," said Kumar.
