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Indian-made foreign liquor (IMFL) sales saw a 23 per cent jump, year-on-year, between April and September FY22. However, nation-wide recovery to pre-Covid level is yet to happen.
H1FY22 liquor sales remain 13 per cent lower than 2019 (pre-Covid year) with some Uttar Pradesh, Arunachal Pradesh, Chandigarh and Telengana recording sales that were higher than pre-Covid levels. On the other hand, States such as Meghalaya, West Bengal, Kerala, Delhi, Chhatisgarh, Madhya Pradesh and Andhra Pradesh reported recovery ranging as wide as 28–73 per cent but still below pre-Covid levels sales.
This is attributed to low base effect as the April to June quarter saw a 50 per cent jump (in sales) largely on account of reduced base in 2020-21 due to Covid-led closures during April – May 2020.
The second wave of Covid in April and May forced disruptions but the impact was mitigated, the Confederation of Indian Alcoholic Beverage Companies (CIABC) said in its half-yearly report.
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Many States had withdrawn the Covid cess imposed in FY21 and new taxes on account of Covid were not imposed this time, which helped sales recovery.
In Q2 FY22, sales growth normalised to an 8 per cent level over the previous year.
Among major States, growth was led by Odisha (up 68 per cent), Assam (up 50 per cent), Andhra Pradesh (up 81 per cent), Uttar Pradesh (up 35 per cent), Jharkhand (up 35 per cent), Rajasthan (up 30 per cent), Maharashtra (up 27 per cent) and Punjab (up 26 per cent).
States where liquor (IMFL) sales remained sluggish on a y-o-y basis include Meghalaya (down 54 per cent), West Bengal (down 16 per cent) and Chhattisgarh (down 7 per cent).
State-wise outlook
According to Vinod Giri, Director General, CIABC, the structural issues in Meghalaya and Chhattisgarh introduced through changes in route-to-market last year are yet to corrected.
“We do not expect immediate sales recovery in these markets. West Bengal is in the process of making corrections in pricing and route to market, impact of which will be seen in the October to December quarter,” he told BusinessLine
In Kerala, the government has ordered changes in alcohol pricing, ordering and regulation that are disrupting supplies. “These may prevent sales recovery and degrowth is likely to remain,” he said, adding that the route-to-market corrections in AP and resumption of supplies may help consolidate recovery.
Also see: AP to reduce VAT on alcoholic beverages to bring parity with rates in Telangana
According to Giri, in the absence of any clear tailwinds, sales in MP may retain a deficit compared to last year at the end of the year, while in case of Delhi, disruptions are expected to run through the whole of October to December quarter and into the early days of the January-March quarter.
“We expect sales to remain well behind last year in the third quarter as well as on the full fiscal year basis,” he said, adding, “On all India basis, we expect sales to recover further in October-December quarter riding on festive season and, if similar trends continue, we should be back to pre-Covid levels by March 2022.”
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