Liquor prohibition not the solution as it rarely works: ISWAI CEO Nita Kapoor

International Spirits and Wines Association of India (ISWAI), an industry body promoted by the multinational alcoholic beverage companies, having investments and business operations in India, highlights the industry's perspective on government policies and promotes best practices as well as responsible use of beverage alcohol products. "The trends and patterns of alcohol consumption are changing in the country. With an increasing acceptance of women consuming alcohol, growing popularity of wine, and high demand for expensive quality liquor, the market scenario seems to be very progressive in the near future," Nita Kapoor, Chief Executive Officer, ISWAI, tells Bizz Buzz in an exclusive interaction

What is your take on the new liquor policy announced by the Andhra Pradesh government? How will it impact the liquor sector?

ISWAI (International Spirits & Wines Association of India) welcomes the new policy by the Andhra Pradesh government from 'prohibition' to 'restriction' (nishedham to niyantran). A more long-term solution is awareness and responsible drinking to address irresponsible consumption / abuse of alcohol. A balanced, pragmatic and transparent approach of doing Alcobev (alcohol beverage) business in the State is the way forward to build an economic opportunity for the State.

As we are aware, the Andhra Pradesh State Beverages Corporation Limited (APSBCL) under the State Excise Department, runs the retail sale of alcohol in the State. The State government has decided to open new liquor outlets in entities such as ports, industries, and special economic zones (SEZs). It will have a positive impact on the liquor sector as it will attract tourists. The new outlets will be opened either as tourism outlets or directly under the management of APSBCL like other existing retail liquor outlets. This will help meet demand for liquor from tourists and bring revenue to the exchequer and will promote development of the tourism ecosystem which will impact state revenues positively.

Is the investment environment in Andhra Pradesh conducive for liquor manufacturers?

The proposed new shops are earmarked for tourist destinations that already have the AP Tourism Hotels & Resorts, where responsible consumption can be implemented and practiced. To succeed in this initiative, it is imperative to ensure the right and national brands are made available. Then, domestic tourists would have access to brands of their choice from the States they come from. It is imperative all national popular brands are made available to cater to consumers' preferences. A phased and responsible alcohol consumption policy is the key driver to promote tourism.

Will the decision of the Andhra Pradesh government to open liquor stores at tourist places bring in more tourists into the State?

In fact, in promoting tourism, Kerala has some great lessons to share as tourism is the mainstay of the State and being mindful to the citizens' sentiments led to a revenue growth from an average of 9 per cent to 12.6 per cent and an increase in tourist inflow by over 10 per cent.

Most of our States have an inherent attraction for tourists and are focusing on domestic tourism as one of the strategies to recover from the impact of pandemic and create livelihood opportunities within their States. So the announcement of new shops will aid the revenue for the State. The State Tourism Department has identified 174 spots to set up liquor stores along with the existing 147 locations.

The new outlets will be opened either as tourism outlets or directly under the management of APSBCL like other existing retail liquor outlets in the state. APSBCL would need to ensure that the visitors/tourists into AP, will also get their choice of brands that are currently not available in AP (McDowell's No.1, Imperial Blue, Royal Stag, Royal Challenge, Blenders' Pride, Signature).

Also, it is essential to look at the whole policy in a structured manner, considering the hospitality industry like bars, hotels, restaurants, and range of brands, timings, responsible consumption etc. This should be balanced by educating and spreading awareness on responsible drinking to consumers/citizens.

The Andhra Pradesh government led by YS Jagan Mohan Reddy planned for a total liquor prohibition in phased manner, but changed its plans now to 'restrictions'. Is the total prohibition not possible?

Prohibition is not the solution as it rarely works. We have seen and experienced that it invariably leads to illicit/counterfeit/ poor quality products, and drives towards abuse. A long-term solution is creating awareness on responsible drinking and consumption, to address irresponsible consumption / abuse of alcohol. A balanced pragmatic and transparent approach to doing AlcoBev business in the State is the way forward to build the economic opportunity for the State.

How is the Alcobev industry doing in India now? What kind of growth the sector will log in this financial year?

During the Covid period, like any other sector, Alcobev had an impact. The decline between the Covid wave 1 and 2 is around 5-7 per cent overall because of the pandemic as bars, restaurants, and outlets were shut. The government in some States did enable home delivery of liquors to avoid Covid problems on ground.

How does your association plan to promote responsible drinking in India?

Prohibition will lead to illegal liquor stocks from neighbouring States and also incidence of smuggling. However, policy of restriction needs to go hand in hand with a regular and long term awareness and education campaign on responsible drinking. ISWAI has launched a State-wise citizen's survey in AP to seek their views and inputs and we will be sharing the outcomes with AP Chief Minister shortly.

Together with CII State, ISWAI plans to launch the Southern Round-Table Conference starting with AP that will include doing business in AP and building economic opportunities. CII-CeSRAC will also be sharing its plans on building a culture of responsible drinking. The main focus of the campaign is empowering and educating consumers on safe and responsible drinking.

The Pahle India Foundation is also coming forward to seek out the voice of the citizens of AP through a state-wide survey. Also lSWAI, along with its member companies are keen to develop a campaign that will help the State Government of AP to promote right education on safe & responsible drinking in the State.

What are the emerging trends in liquor consumption patterns in India?

Home delivery of liquor has started in many States during the Covid time. Also, when the restaurants, liquor shops, bars, etc., were shut during this time, people started looking at other avenues to buy liquor and this has resulted in people consuming in their homes, leading to responsible drinking in a family atmosphere. This has also ensured maintaining social distancing norms and less crowding at retail outlets.

The trends and patterns of alcohol consumption are changing in the country. With an increasing acceptance of women consuming alcohol, growing popularity of wine, and high demand for expensive quality liquor, the market scenario seems to be very progressive in the near future.

Digitalisation and e-commerce seems to be the way forward. Ever-rising online sales vouch for that. But online sale of liquor is yet to take off in India. As an association, how does ISWAI plan to clear impediments for online liquor sales?

The ongoing Covid-19 pandemic has brought forth many unprecedented challenges altering normalcy and the AlcoBev industry is no exception. We have seen some of the State governments' have enabled home delivery of alcohol as a new channel. The adoption of the e-commerce or home delivery route will ensure the safe delivery of alcohol while eliminating overcrowding at the retail outlets. In addition, the e-commerce model will further enable the eradication of illegal practices and illicit transactions, while simultaneously ensuring the government's revenue is intact. From a retail standpoint, the e-commerce route is the most suitable model for retailers as consumers can directly select their preferred alcoholic beverage from the comfort of their home through their mobile devices, often also leading to purchase of premium alcoholic beverages of their choice.

Taxes on liquor vary from State to State, leading to price variations. Can Alcobev be brought under GST to turn into a single market?

The taxation of Alcobev is one of the key sources of 'own tax revenues' for the States, on which they can decide the levels of taxation. As a result, States are unwilling to yield this taxation power to the GST Council by agreeing to bring alcohol for human consumption into GST. So, it seems unlikely that Alcobev will come within the purview of GST any time soon.