Spirits sales slump in India

Sales of spirits in India fell by more than 1.2m cases in April following the introduction of the Supreme Court’s ban on liquor sales within 500 metres of motorways and national highways.

The official figures showing that sales fell by 5% are tempered, however, by the fact that April was a very hot month. The slump was sharper in mass market, price-sensitive products, extending the trend of the last financial year in which the industry sales fell by 2.2%.

Many in the industry said that the new law was unclear in the run up to its introduction so there had been considerable destocking in the first quarter, following the court’s warning in December that the ban would be introduced at Easter.

In the run up to the ban almost a third of all outlets closed.

“People want liquor stores conveniently located, and the industry’s sales were hurt due to the closure of so many shops,” Jeetu Hemdev, executive director at Allied Blenders, told The Times of India. Allied produces Officer’s Choice, the country’s largest spirits brand by volume.

Overall, the industry is confident that sales will return to a more normal trend in the second half of this year as retailers and customers adjust to the new distribution pattern. Several states are also working to mitigate the impact of the ban by declassifying highways.

Even so, the short-term effect is negative. United Spirits, the country’s dominant producer, has warned that it will depress its first-half profits, which in turn will affect Diageo, its controlling shareholder.

Meanwhile, Pernod Ricard is targeting the small market for wine in India, where it has just launched its Campo Viejo range to add to the Jacob’s Creek varieties already on sale.

Christian Barré, the chief executive of Pernod Ricard Winemakers, Spain, has forecast that the Indian wine market will continue to grow at 15 per cent and double every five years.

“The government’s increased focus on tourism, a young population with good disposable incomes and an evolved palate will make India a strategic investment market for winemakers, ” Barré is reported as saying.