“Govt needed to take a far more pragmatic view for alcobev during the lockdown”

Emkay Global Financial Services report indicates improving recovery for alcohol companies – growth in premium spirits and faster recovery in beer since trade reopened post-pandemic. This certainly is good news for the industry as the economic shock of the pandemic on the Alcobev industry was tremendous. While sales are looking up, catering for events and large gatherings is unlikely to look up for a while. In this episode of Mrigashira, Charu Raizada was in conversation with Samar Singh Sheikhawat, known for his approach which strengthens consumer preferences, now an independent business consultant and start-up advisor.

Listen to the podcast here: https://open.spotify.com/episode/0PMwVnSveUMwEae0QJZBGD?si=9bd17f770f974256

The Alcobev industry has seen drastically reduced sales, hard stop to events and parties combined with economic hardships – it has been a rough ride for the industry. Does the industry need to reinvent?

Consumption at pubs, bars, restaurants, outdoor events is actually a small percentage of the consumption occasion for the Alcobev industry. The larger consumption occasion is actually buying from, what we call, off premise stores and drinking either at the off premise or the roadside, in parks or in your cars. With 70 per cent of all alcohol consumption being out of home, it was a very difficult situation where people are not allowed to go out, liquor stores are shut or even if they were open, the timings were restricted, stock availability was poor, and that is what has dramatically impacted the industry.

Frankly, if you look at the industry’s ability to enforce social distancing, it is far superior to that of food and grocery outlets. The frequency with which you buy from these outlets is significantly higher than at liquor stores. There are about 15 million outlets of all kinds in this country, but the Government didn’t shut those down. On the other hand, there are only 80,000 outlets selling liquor in this country of all kinds – pubs, bars, restaurants – but these were shut down. Moreover, the numbers of people coming to each of these outlets are fewer than what go to food and grocery outlets. So, in a situation where people don’t have access to food and healthcare is an issue, the Government will say ‘how can we allow alcohol to be sold’.

So, is this more of a political image sort of reflection issue, than based on actual reality?

The question that the industry always asks is – are we a legitimate industry or not? You’ve given us licenses to operate our breweries or distilleries. You know we pay our taxes. And in fact, in the case of the beer industry, if you as a consumer are paying Rs 100 to buy a bottle of beer, as a company, the gross contribution is about Rs 18 or Rs 20. Now, in a comparable FMCG business, it would be Rs 60. All the policymakers and the dispensation recognise this reality. But they always take an alcohol negative stance because they believe that’s the politically correct thing to do.

I think the Government needed to take a far more pragmatic view during the lockdown, they should have allowed Alcobev outlets to function. This is a legitimate business, it contributes to jobs, directly and indirectly, employs over 100,000 people, contributes several crores in taxation revenues, it gets investment into the ecosystem.

Every state has a different set of regulations. Can strategic public affairs help navigate issues and pave the way to ensure ease of doing business in the country?

The short answer is yes and the industry has actually done a lot. If you go back 15-20 years, most state governments didn’t even have separate rules on taxation for spirits and for beer. So, for many years we lobbied with state governments that they are two different alcohol categories, and therefore should be treated differently.

GST kept alcohol, real estate and petroleum out of its ambit, because these are state subjects. Since one state doesn’t necessarily agree with another state, therefore, the advocacy needs to be at the state level. You cannot go with a one-solution-fits-all at the Central Government level. Secondly, there are five or six different models in this country that are government-owned markets and private markets. And even within government or, what we call, cooperation markets, there are states where the government owns both wholesale and retail. When I was at United Breweries, I used to always advocate for a much stronger government outreach program. But somehow we have always been a soft target – we always feel that our license to operate can be taken away at any point in time. But it’s a legitimate industry, it provides employment, it provides taxation, it provides investment, it keeps the economy going. And some would argue that it provides a lot of happiness to people as well.

The industry is always under the scanner for high consumption of water and little work has been done in that direction. Zero waste, sustainable practices, things are being done in bits and pieces, but is it not time to truly make a difference?

There are only two ways the world can change. Either the law mandates it, or consumer awareness or activation – citizens’ participation in governance and now with social media becomes so powerful and strong that you have no option but to do it. This is a larger global movement, climate change, sustainability, the environment, and younger generation who always want a purpose beyond just making money. Speaking for myself and United Breweries, we won awards from UNESCO for our water conservation program. Whether it is rainwater harvesting or water recycling, the global average of best in class companies is 4 liters of water for every liter of beer that is made. But in many breweries, we actually went below 4 liters. In fact, by the time I left, our national average was about 3.12 litres, better than international breweries in terms of water conservation. And the aim was to become a water neutral company or a water positive company by 2030, which means you charge back into the ground as much water as you are taking from it.

*Edited for length and clarity

(Mirgashira is a podcast for Indian PR and Communication professionals anchored by RadhaRadhakrishnan and Charu Raizada. To listen to all episodes visit https://www.digitales.co.in/industry-insights/mrigashira-podcast/)