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As Indian States Test Alcohol Delivery, Can Privatisation Solve The Standardisation Conundrum?

As Indian States Test Alcohol Delivery, Can Privatisation Solve The Standardisation Conundrum?

Chattisgarh, West Bengal and Tamil Nadu launched delivery of liquor via an online platform

Hyperlocal delivery startups are approaching authorities seeking necessary permissions

No startup has been permitted to deliver alcohol in India yet

When the lockdown on liquor and alcohol shops was eased on May 4 after 40 dry days, thousands were seen jostling in queues across the country, visuals of which went viral. But the overriding risk of opening liquor sales was an open secret. Indian states together earned about INR 2.25 Lakh Cr from taxes on alcohol in the financial year 2020. Tax from spirits in the form of excise duties accounted for more than 15% of states’ tax revenues in FY19.

For instance, Tamil Nadu earned around INR 32K Cr from liquor excise taxes in the last financial year, roughly around INR 88 Cr in a single day. Based on these figures, the Tamil Nadu government is likely to have lost around 3.5K Cr in the last 40 dry days due to the lockdown.

However, tipplers, in their thirst to procure alcohol flouted social distancing norms while queuing up, often leading to cane-wielding cops intervening and in many instances, even forcefully lowering shutters. As a result, state governments were forced to take the online route to keep the tax registers running and sustain their effort to combat the pandemic.

States like Delhi and Andhra Pradesh introduced a new ‘Corona tax’ to hike the prices of liquor, in a bid to make it unaffordable for many. However, when higher prices didn’t deter crowding, many state governments began exploring the online route to sell liquor. The system for liquor delivery was first introduced by the excise department of Punjab and soon other state governments leveraged different options to sell liquor to increase state revenues while maintaining social distancing.

For instance, Delhi and Pune launched e-token to curb gathering at outlets while Chhattisgarh, West Bengal, and Tamil Nadu decided to take online orders of liquor which are home-delivered. In the US and many other countries in the West, an online delivery system for alcohol is already in place.

States Experiments Online Route For Liquor Sales

State/CItyMeasures Taken
OdishaOnline order and home delivery
Tamil NaduOnline order and home delivery
Punjab Order through call and home delivery
West BengalOnline order and home delivery
MumbaiOrder through call and home delivery
ChhattisgarhOnline order and home delivery
KeralaBook online and collect from store

In Chhattisgarh, liquor can be ordered from the website and mobile application of the state-run Chhattisgarh State Marketing Corporation Limited (CSMCL). Home delivery of the alcohol will be facilitated with the help of delivery-partners. For registration, people have to furnish their mobile number, Aadhaar card details and full address. The online platform will register a user after successfully verifying the one-time password (OTP).

They can select a nearby shop, browse the liquor available, place orders and see the stock left and the price list. As of now, a person can order only up to 5,000 ml liquor at a time for home delivery while paying an additional INR 120 delivery charge for this new service.

Similarly, consumers above the age of 21 can place their orders on West Bengal’s State Beverages Corporation (BEVCO) portal. They have to provide details such as address and mobile number. No Aadhaar card is required for the age verification of buyers on the platform.

Meanwhile, Tamil Nadu government is using the Tamil Nadu State Marketing Corporation (TASMAC) online platform for facilitating the home delivery from May 8. Consumers can order alcohol from the mobile application as well as from the online website.

Meanwhile, the Kerala government decided to take online bookings of liquor which can be collected by people from 301 state-run liquor shops. As of now, a final date of opening of the shops hasn’t been finalised by the government, according to a report by India Today.

Delhi, Pune Switches To E-Tokens

While the debate over home delivery of alcohol rages on within the food and restaurant industry, the Delhi and Maharashtra excise department started an online token system on a pilot basis for the sale of liquor to avoid crowding at shops.

As part of this e-token system, people can register and collect an e-token for purchasing liquor from the shops. All shops have been told to sell liquor to only people who have valid e-tokens.

Meanwhile, the authorities are issuing a limited number of e-tokens online so that fewer people come at the liquor store and social distancing is maintained. The tokens have specific shops mentioned on them along with a time frame.

Will Hyperlocal Startups Deliver Booze?

Currently, the question remains if regulators can streamline liquor delivery through hyperlocal delivery companies, thereby creating a safe, reliable and transparent way to reach alcohol to customers’ doorstep.

Other concerns over the delivery of alcohol are illicit sale and age verification for buyers. In Chattisgarh, the government’s portal asks for age and Aadhaar number. However, it seems that the government hasn’t integrated with the Aadhaar database as Inc42 was able to sign up and order liquor by providing the details of a 12-year-old by simply entering a different birth year.

Rahul Singh, the founder and CEO of The Beer Cafe, said that as a country, the industry has been waiting for liquor ecommerce to open up for the longest time. As of now, many countries in the West have allowed the online selling of alcohol and he doesn’t see a problem with it.

However, Dineout’s cofounder and CEO Ankit Mehrotra had raised some concerns over the distribution of spurious liquor. He warned that it will be a risk to open up home delivery to anyone and everyone.

Mehrotra pressed for the need to control home delivery with proper technology in place for monitoring. “Be it liquor stores, online tokenised system, contactless pickup and drop services, etc” he added.

However, HipBar founder Prasanna Natarajan has a solution. He notes that Aadhaar-based KYC, similar to online payments or lending, can be used to check the legality of purchases. Natarajan also noted that the delivery person can also ask for ID proof at the time of delivery, thereby preventing minors from buying liquor.

Recently, several media reports stated that foodtech giant Swiggy is in talks with various states to allow alcohol delivery. Similarly, Zomato has held discussions with the International Spirits and Wines Association of India (ISWAI) and state governments to venture into alcohol delivery as it believes that the delivery of liquor can promote responsible consumption of alcohol and social distancing.

However, concerns remain whether liquor retailers are willing to partner with hyperlocal delivery startups or start their own delivery business. A source close to the development said that many liquor store owners also run restaurants and they don’t want to face the same wrath of food delivery players in this space as well.

Besides Zomato and Swiggy, other delivery startups like Dunzo, Liqhub and HipBar, which were previously delivering alcohol are eyeing to re-enter the market after they had to shut down operations due to regulations.

Will Liquor Delivery Continue In Post-Covid World?

In the current scenario, a lot has been changing due to the Covid-19 outbreak. Many believe that some of the changes are going to be permanent and home delivery of alcohol could be one of them. the of things which might become a new reality in the post-Covid world. “Anything that can be delivered should be delivered,” said Singh.

Director general of Confederation of Indian Alcoholic Beverage Companies (CIABC) Vinod Giri vows that a new channel, which is more consumer-friendly, than the previous system, is here going to last.

Giri noted that though liquor is one of the key revenue-generating sources for the government, there haven’t been substantial technological developments to improve the industry’s functioning of the industry. “We have been talking to the government for implementing technologies and automation in various processes,” he added.

However, CIABC is impressed with the recent developments in the space and expects it to continue in the future. Giri said, “We have been trying to convince the government to allow the home delivery of liquor since last year while implementing automation and other technologies in the supply chain. This will ensure minimal leakages in the system.”