High Spirits Again For Liquor Barons

The telephone rings incessantly at the New Delhi headquarters of the Confederation of Indian Alcoholic Beverage Companies (CIABC). Congratulatory calls are pouring in and the CIABC is getting kudos for keeping up the pressure on Bansi Lal & Co. The Haryana cabinets decision on Wednesday to do an about-turn on its much publicised prohibition policy, less than two years after it was imposed, is being seen as a moral victory.

Our stand has been vindicated, says Pramod Krishna, secretary general, CIABC. Krishna has been lobbying for the anti-prohibition camp, meeting ministers and bureaucrats, reasoning with the intractable CM and even engaging in heated debates with the likes of Swami Agnivesh. Sometimes on the national network.

 

Prohibition is not an election plank, it is more an election prank, says Krishna. Warming to his subject, he adds, Those who preach prohibition should take a lesson from history. Prohibition has never succeeded not even in the United States. In dry states only bootleggers and the worst kind of racketeers stand to gain.

This view is echoed by members of the liquor industry. I am more than happy. The Haryana experience will teach other states not to flirt with this populist policy. Moderation is what governments should ask for instead of taking such extreme measures, says Amrit Kiran Singh, area director & vice president South Asia, of Brown Forman Beverages Worldwide (BFBW).

This $2 billion Kentucky-based maker of Jack Daniels and Southern Comfort is understandably pleased. Two years ago they arrived in India with ambitious designs on Haryana. We had done extended market research and were ready to launch when prohibition gripped the state in July 1996. We disbanded our sales staff, and gave them jobs in Delhi and Punjab. Now they have their work cut out in Haryana, says Singh.

BFBWs sales team has rushed to Haryana and is touching base with distributors and retailers. The company will be aggressively marketing Early Times Kentucky Whisky and Southern Comfort. Singh has his eyes fixed on the Rs 4,000 crore Indian whisky market and will soon test launch Blue Grass, priced at Rs 250, in Haryana. The per capita income of people in Haryana, Punjab & Maharashtra is higher than in states such as West Bengal and Bihar. So we are optimistic that our high value brands will do well in Haryana. It could contribute as mush as 35 per cent to our business in the north, says Singh.

At least 10 breweries and distilleries in the state were caught on the wrong foot when Haryana went dry. These players include Shaw Wallace-controlled Haryana Breweries, Inertia Industries, Indo-LowenBrau, Ashok Liquors, Mehra Beverages, Haryana Organics, Haryana Distillery, Modi Distillery, Frost Falcon and Associated Distilleries. Ram Sahay Verma, principal secretary to the chief minister, advised them to concentrate on producing rectified spirits and industrial alcohol. Some of them did. Shaw Wallace even sunk crores into its Sonepat plant to manufacture non-alcoholic beer and mineral water under its brand name Directors Special.

While most manufacturers found a way out, the going was tougher for some. In 1995, Sunil Tandon, a one-time garment exporter acquired the Midas touch with his beer Sandpiper. His three-year-old firm, Inertia Industries invested Rs 35 crore in a unit at Dharuhera in Haryana which has a capacity of six lakh beer bottles a day.

Unlike the rest, we did not have a manufacturing facility outside Haryana. So we took concerted steps to set up shop in Maharashtra. Now that we can go back to bringing out Sandpiper from Dharuhera we will feel a terrible pull in two directions, says a senior executive at Inertia Industries. Analysts question whether Inertia Industries will be able to take this strain on its depleted resources.

Meanwhile, Munich-based beer company Hofbrau, which had hoped to set up beer gardens in Haryana, may bring their plans out of the cold storage. According to Maximilian Erlmeier, director of international business, Hofbrau is interested in setting up pubs in Haryana, Bangalore and Mumbai. Undoubtedly, Bansi Lals move to revoke prohibition has gladdened the hearts of upmarket establishments such as DLF Gymkhana, Fireball and Landbase Indias Classic Golf Resort.

However, Haryanas gain will be Delhis loss. Prohibition had proved to be a windfall for Delhi. This year the excise department has netted over Rs 500 crore against a target of Rs 425 crore. We are not as worried about losing excise duty as we are about the neighbouring state opening liquor vends near the border to lure Delhiites, says Delhi chief minister Sahib Singh. Dozens of liquor vends were shut on the fringes of Delhi after Haryana sought Delhis co-operation to make prohibition a success.

Now these shops are likely to be reopened. In fact, the Haryana government has promised to give licences to at least a thousand liquor vends so that it can generate revenues to the tune of Rs 1,000 crore. It seems Haryana is taking to the bottle with a vengeance.