Time to take the bottle home

LIFESTYLE: Pubs, bars say a third of their business is gone

Ranjan Ahuja works for a multinational information technology company at Gurgaon in the suburbs of Delhi. Till not so long ago, weekends used to see him at the several hip pubs in the city with his favourite single malt. The company was doing well and Ahuja had every reason to party. These days, Ahuja buys a bottle of Indian whiskey from a shop and drinks quietly at home.

The global economic meltdown has given a curious twist to the liquor business. Pubs and bars say business is down up to 35 per cent and liquor companies say buyers have slid down the value chain, though retail sales are still strong. And with foreign tourist arrival set to dip this winter, imported liquor sales are certain to take a hit.

A manager at the F Bar in New Delhi Ashoka says sales have crashed by a third in the last month and a half. Premium customers, not willing to settle for a lesser brand, now order less. Another source in the hospitality business, who does not wish his properties to be named, says footfalls are down a quarter across his outlets in the north.

What has also hurt sales is the recent ban on smoking at public places. “Smoking and drinking go together. Nobody likes to get up and go to smoke in a corner or outside,” says a restaurant owner. “On-premises sales are feeling the pinch of smoking ban in hotels and bars,” adds United Breweries Deputy President Shekhar Ramamurthy.

This is a fact acknowledged by liquor companies. “On-premises consumption has decreased by 10-15 per cent, given that hotels and bars have very high prices and people want to save in a downturn,” says Radico Khaitan and Diageo Radico Distillers CEO Raju Vaziraney. “On the other hand, off-premises consumption has increased. People prefer to buy and drink at home as it’s cost effective.”

In other words, while restaurant, pub and bar sales are down, retail sales are still robust. Senior executives at Vijay Mallya-owned United Spirits, the country’s largest liquor group, too admit that sales have seen such a shift and said it was still early to assess the final impact. For the record, the liquor industry had grown 30 per cent last year. It will be interesting to know if the industry can notch similar growth this year.

Diageo India Director (marketing) Santosh Kanekar makes the point that the current slowdown has created an entry barrier for new brands. “Appetite for new brands will decrease. People won’t like to experiment. Value consciousness will go up, so strong brands stand better chance to sustain sales,” says he.

One sector which however is certain to feel the pinch is duty-free shops. “Yes, less number of foreigner arrivals will impact sales. I haven’t seen any increase in footfalls in duty-free shops in airports. Only a chunk of Indians coming back home are picking up some liquor,” says Kanekar.

Also, cautious consumer spending will hit super premium and premium brands, while regular and deluxe brands consumption is unlikely to get any hit.