Alcohol and Beverages industry is no exception to rising inflation across products. Executive Deputy Chairman of Allied Blenders and Distillers (ABD), Shekhar Ramamurthy counts easy liquidity made available by governments globally to mitigate economic problems arising from the pandemic, the Russia-Ukraine war and its fallout among the culprits behind the rise in prices.
With the cost push affecting glass, energy, paper, plastic among other products; he said that the industry is in process of taking measures to offset the effects. However, the inevitability of passing on the higher costs to the consumers has resulted in price rise in liquor products.
Nita Kapoor, CEO of the International Spirits and Wines Association of India (ISWAI) told CNBC TV18 that sustaining operations is a big challenge for alcohol manufacturers.
With wet ingredients crucial to alcohol manufacture, such as Extra Neutral Alcohol (ENA) and Scotch being 6 percent more expensive than last year, she pointed to the triple whammy of price rise of even dry raw materials: 8 percent for glass bottles, 37 percent for outer cartons, 5 percent for labels and 15 percent for closures in just a year’s time; and 68 percent rise in transportation costs from FY 2018 to FY 2022.
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She sounded confident on the possibility of liquor trade in Delhi regaining its market share of IMFL (Indian Made Foreign Liquor) and BIO (Bottled in Origin) products from the National Capital Region (NCR) on the back of the implementation of 1+1 sale offers on various alcoholic drinks in the city.
While the consumers are enjoying the discounts, she feels that the alcohol manufacturers are facing the twin challenge of no price increase mandated by the Delhi government since 2017 and the highest inflation on all direct materials seen this year.
Speaking on the national capital’s new liquor policy, Ramamurthy explained that Delhi had introduced a new duty structure and route-to-market towards the end of 2021 and the dynamics being seen now are a result of the system adjusting to the new rules and regulations.
Pointing to similar retail behaviour in Haryana over the past few years, he said that the Delhi government has already initiated steps to correct any imbalances in the system, while expecting that the new excise regime will soon settle down to the benefit of all stakeholders.