Liquor companies on a high as sales growth exceed pre-Covid levels

Liquor companies are on a high even before the New Year’s Eve after sales growth exceeded pre-Covid levels over the past two months, bouncing back from the severe sales cramp after the lockdown was clamped across most parts of the country since March. Volumes from six key states including Maharashtra, Karnataka, Andhra Pradesh and Kerala that account for 55% of Indian made foreign liquor (IMFL) were up 7% year-on-year during October and November, a recent report by Emkay Securities that sourced numbers from companies and government-controlled retail and wholesale firms said. Companies said December growth was even better.

“Fear psychosis has reduced and people are travelling uninhibitedly now, boosting our sales. We reached pre-Covid levels month. Our luxury division saw 30% sales growth, while the economy segment had about 15% growth,” said Rakshit Jagdale, managing director of Amrut Distilleries. The overall spirits category had fallen consistently since March including the quarter ended September that saw a decline of 13%. Slowing demand for liquor was exacerbated after nearly 15 Indian states hiked taxes after the Covid lockdown. “Demand for United Spirits has returned to pre-Covid-19 levels. It is also benefiting from some tailwinds – duty-free shifting to duty-paid and shift from beer,” said Emkay after interacting with eight liquor companies including USL and Pernod Ricard in an alcobev conference.

Increased off-trade timings, re-opening of on-premise sales, tax reversals by some states and overall post-Covid unlocking have accelerated the pace of recovery. With further opening up of on-premise across states, companies expect the sector to recover fully in the third quarter. “In the last two months, we have registered 20% sales growth over last year. In higher-priced categories, we have seen about 30% increase compared to December last year. While the economy segment is growing at 3-4% on an average, it is higher than last year,” said Paul John, chairman, John Distilleries, adding that at-home consumption has increased and retail outlets have made up for the dip in the volume in bars and restaurants which continue to receive low footfall.

READ  India ranks 34 on Global Real Estate Transparency Index

Taxes account for almost two-thirds of the consumer price of alcobev products and are a big revenue generator for states. Most states that raised taxes sharply post the Covid outbreak suffered tax revenue losses and have now reversed it – either fully or in part – to improve volumes and tax revenues. This is reflected in higher demand too. “Industry performance currently is quite dispersed due to state-specific reasons including new excise policy and lockdowns. However, it continues to improve on a month-on-month basis and normalising during the third quarter of FY21,” said Amar Sinha, chief operating officer, Radico Khaitan.

The recovery of the beer category has been slower but the pace of recovery in October and November seems to have accelerated, mainly led by Karnataka, Maharashtra Tamil Nadu, Goa and Eastern markets, with overall decline in the six key markets reducing to 21% in Oct from 31% in September, and further improvement in November as per channel checks, said Emkay Securities.



Please enter your comment!
Please enter your name here