Liquor sales fell 12% during FY2020-21 due to lockdown, high cess: CIABC

Sales of Indian made foreign liquor (IMFL) fell 12% during last fiscal after lockdown forced shops to shut for more than a month and restricted bars and restaurants to operate at lower capacity.

The total sales of IMFL products in 2020-21 was 305 million cases (9 litres each) which is nearly 12% below the previous year, according to data compiled by the Confederation of Indian Alcoholic Beverage Companies (CIABC).

“Many states showed positive trends through the quarters, and even though most states were unable to fully recover volume lost in first and second quarters, strong performance in third and fourth quarters reflects fundamental strength in the market. It also confirms that there is no lasting shift against alcoholic beverages in consumption baskets,” said CIABC Director General Vinod Giri.

The industry body, however, pointed out that few markets that imposed high cess and tax during the first wave of Covid, and did not withdraw or reduce it, saw demand shrinking while states such as West Bengal and Chhattisgarh that changed route-to-market impacted sales too.

Markets such as Maharashtra, Goa, Haryana, Himachal Pradesh and Uttarakhand saw strong recovery while states including West Bengal, Rajasthan and Chhattisgarh witnessed steep fall over the previous fiscal. The quarter to March saw both overall spirits and beer growth expand nearly 10% year-on-year, according to GlobalData.

“The category is resilient and the category always bounces back. Having said that there is some short term dampening of attitude and spirits of people and therefore I would think there is some dampening of demand. But it’s hard to say how much it is because of shops being shut and accessibility issues, and how much because of the spirits of people dampening,”

United Spirits

managing director Anand Kripalu said at an earnings call on Monday after posting a 12% increase in sales in the March quarter.

However, for fiscal year FY21, sales declined 13%, or by Rs1,200 crore. Diageo-controlled USL said store closures during the first quarter last year due to the nationwide lockdown and route to market change in Andhra Pradesh led to a Rs1,000 crore revenue loss last fiscal year.

While the overall liquor market fell by 42% during the April-June quarter of the last fiscal, it fell 9% in the second quarter. The market, however, expanded 1% in Q3, and recovered to a growth of 6% during the latest Jan-March quarter.

“The ability to recover is huge. Alcohol is now a semi-essential category in the consumer share of wallet and we expect to recover faster than other discretionary categories,” said Kripalu adding that nearly 17 million people would be added to legal drinking age annually in India for the next three to five years. “The states also need the revenues and they do not see any value in keeping alcohol completely shut, so they are also finding a way to make sure people who want to buy alcohol have access.”