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Liquor firms, outlets brace for challenges after highway sale ban

LiveMint logoLiveMint 03-04-2017 Deepti Govind &

Bengaluru: Liquor firms and outlets across India are bracing for what will undoubtedly be a challenging start to the new fiscal year as the Supreme Court’s ban on the sale of alcoholic beverages within 500m of state and national highways took effect over the weekend.

“In places like Maharashtra, wholesalers stopped selling to these outlets in December itself. So, the impact has been there since December,” said Deepak Roy, executive vice-chairman of Allied Blenders and Distillers Pvt. Ltd. “It will continue to impact business very badly over the next three to four months. The first quarter will see about an 8-10% dip in sales and after that it will normalize.”

His view was shared by Rakshit Jagdale, executive director of boutique home-grown liquor maker Amrut Distilleries Pvt. Ltd, which owns the popular single malt brand of the same name. There will be an immediate 15-20% drop in revenue and a return to normal levels in the middle of the second quarter, Jagdale said.

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The apex court had, in December, banned the sale of liquor within 500m of highways across the country. The decision came after a public interest litigation case was filed seeking to curb road accidents on highways due to drunken driving.

While at least eight state governments have since petitioned the court, either against the ban entirely or for the rule to be modified to extend the time frame or reduce the 500m limit, the Supreme Court has not changed its view. The only modification the apex court has made to the rule was to alter the 500m limit to 220m in towns with a population below 20,000 and exempt Meghalaya and Sikkim.

“Some of the liquor companies may think restructuring of manpower is necessary. For example, in Maharashtra, if there were 25,000 outlets and after this ruling, if there are only 10,000 outlets remaining, companies might ask why they need so many people to cater to just 10,000 outlets. Also, I don’t think any company will launch any new brands in the next few months,” said an executive at another liquor firm on condition of anonymity.

Of course, the biggest question is whether a majority of the outlets can be moved at all. Moving outlets away from highways may result in relocating the shops within residential areas. That could lead to other problems for traders and, in turn, liquor companies.

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“It’s not like a medical store where you remove it and put it elsewhere. There may be objection from certain communities if you try and move the shops into a residential area,” said Amrut’s Jagdale. On Saturday, for instance, news agency PTI reported that a group of women ransacked and set fire to a liquor shop in Uttar Pradesh because they were fed up by the district administration’s apathy toward their demand for closing down liquor shops near residential areas.

And then there are other issues with moving outlets in certain parts of the country.

“There is only one road about 3km from our current location in the Basava Kalyana area that does not have a state or national highway in the vicinity. But this means that all 14 liquor shops in Basava Kalyana will have to move to this one road, which could give rise to illegal activities,” said Ravi Borale, president of the Basava Kalyana Wine Merchants’ Association in Karnataka’s Bidar district.

Pernod Ricard’s India managing director, Guillaume Girard-Reydet, had flagged the Supreme Court move as one that would result in short-term pain for the company in an email interview with Mint in February.

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