Alcobev Industry: A growth Engine

The recent trends and developments in India’s alco-beverages industry and also the changing perception of our society towards alco-beverages were the focus of the discourse of the ThinkPad Session.

Some of the issues which were deliberated upon in the session included the revival of hospitality industry on which the success of alcobev business is very much dependent, need for rationalisation of pricing of alcobev products in the face of inflation, need for responsible drinking, changing attitude towards alcohol among the younger generation as compared to the earlier generation.

The session was opened by the moderator, Nita Kapoor, CEO, International Wines & Spirits Association of India (ISWAI). She articulated on the impressive market size (55 bllion USD) of India’s alco-beverages industry and the growth of this market size in the next five years( to 64 billion USD).”The industry accounts for approximately 2 percent of India’s GDP and provides employment to 80 lakh people, largely in agriculture, retail, hospitality and travel and tourism,” Nita averred, setting the tone of the animated discussion.

Nita asked Rajan Bahadur, CEO of the Tourism & Hospitality Skill Council of India on the changes he was seeing in India’s hospitality industry from pre and post-Covid phase and how did alcobev industry play a role in this.

According to Rajan, in the pre-Covid, the hospitality industry of India was having a great run. “Hospitality industry wa the worst hit by the Covid and perhaps the last industry in the country to recover, but now it is again flourishing,” Rajan voiced optimistically.

Hospitality and Covid

He believes during Covid, for India’s hospitality industry the mantra was “not the survival of the fittest but the survival of the quick. Whoever adopted and changed themselves quickly, survived. ”

But in the post Covid phase,according to him, revenge travel, huge domestic travel, MICE becoming a big thing have together given a fillip toI ndia’s hospitality industry. This in turn of course, sounds promising for F&B business, which also includes alcobev business. “There is huge opportunity in tourism and hospitality in India,” Rajan affirmed.

According to him, tourism greatly promotes alcobev industry and “If alcobev industry is properly chanellised, it can be a huge job creator, foreign exchange earner and contributor to GDP.”

Pricing Challenges and Trends

Interference of states in India’s alcobev business is an issue that has been the subject of heated discussion for years. While discoursing on the hot topic, Prof. Pushpesh Pant, an eminent academician and author, voiced against too much state interference in India’s alcohol business to which Nita cited that there were progressive states too who were cooperating with the alcobev industry.

“It is very easy to blame the states and lament, despite the fact that states have their own responsibilities and restrictions, but that would not help our industry. We need to get into a matured conversation with the states,” the moderator aired firmly. Another distinguished member of the five-member panel, Jagbir Sidhu, Corporate Relations Director at Diageo India, informed that Diageo India had the misfortune of withdrawing its brands from four states in India as they were not given a price increase and they could not afford to sell those brands at that given price. He also lamented on the archaic excise acts in some states.

“Often price fixing or price increase of alco-beverages in states defies logic. Sometimes Excise Commissioner in his own wisdom asks us to sell alco- beverages at its lowest price in the country. This is sometimes not feasible as cost of selling alcobev in states can differ. Furthermore, if one state has not increased price for alcobev products for years, then for other states also we have to suffer price stagnation or decline in pricing if the Excise Commissioners persist on having lowest prices for alcobev products prevailing in the country in their respective states,” explained Jagbir.

He gave the instance of Haryana from whose market Diageo India was out for one year.”We have got price increase in Haryana only now,” Jagbir informed. This leads to shortage of supply of alcobev products from the organised industry segment, whose direct consequence to address the latent demand could be the unwelcome scenario of bootlegging and smuggling.

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