Shares of breweries on a high as many States ease lockdown curbs

Our Bureau Chennai | Updated on May 04, 2020

GM Breweries, Radico Khaitan, Globus Spirits jump

The share prices of breweries and distilleries witnessed a huge surge on Monday, after several States relaxed norms for the Covid-19-triggered lockdown. The stock of Associated Alcohols & Breweries surged 10 per cent; GM Breweries gained 8.15 per cent; Globus Spirits, Khoday, Jagatjit Industries, Pioneer Distilleries, Radico Khaitan, United Breweries and United Spirits jumped between 2 and 5 per cent

State governments such as Karnataka, Delhi, Uttar Pradesh, Assam, Himachal Pradesh and Maharashtra have reopened liquor shops, West Bengal allows only in green zones and Punjab in a staggered manner. However, big consuming States such as Kerala and Tamil Nadu preferred to keep the shops closed.

As the third phase of lockdown began today, sale of liquor has been allowed by the Centre with “certain conditions” in standalone shops in all zones, barring containment area. The order to reopen liquor shops is applicable to only standalone shops and malls or shopping complexes will continue to remain closed. The government has also asked shopkeepers to ensure that customers maintain a two-metre distance.

According to various media reports, a lot of people are standing in queue at liquor shops across India, signalling huge demand.

On March 24, the Centre had ordered a nationwide lockdown for 21 days, limiting movement of the entire billion population of India as a preventive measure against the 2020 coronavirus pandemic in India. On April 14, Prime Minister Narendra Modi extended the nationwide lockdown until 3 May, as almost all State governments wanted no relaxation.

Advantage, smaller players

According to ICICI Securities, the liquor industry is also likely to face pressure in restarting the supply chain, given that many State distribution contracts expire in March and therefore the States would need to assign new contracts.

“Moreover, in ‘auction markets’ like Punjab and Haryana, the new “thekkedars” are to start business from April 1, they pay a fixed fee for the contract, etc. It’s highly complicated and may potentially result in smaller and nimbler players (at the State level) having a marginal advantage in the interim,” it added.

Published on May 04, 2020

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