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As govt dithers on home delivery of liquor, Tamil Nadu players mull possibilities
The unmanageable crowd that gathered in front of State-run liquor retail shops across Tamil Nadu raised concerns about the emergence of a ‘Tasmac COVID cluster’, which prompted the Madras High Court to insist that the government shut them down immediately.
By
migrator
migrator
Chennai
The authorities were asked to either wait till the lockdown was lifted, or make arrangements to orders online and deliver liquor at customers’ doorsteps. The Supreme Court, too, has asked states to evaluate the online route.
Though only Punjab, Chhattisgarh and West Bengal have taken steps on home delivery of liquor so far, and Tamil Nadu has moved the Supreme Court against the High Court’s order, many in the industry are expecting this to change in the coming days.
“There are laws which need to be studied as there is no magic wand when it comes to laying down the guidelines for this delivery model. Other states are still evaluating the model where an order placed on website can be delivered through a retailer,” HipBar founder Prasanna Natarajan told DT Next.
The city-based start-up, a front-runner in liquor e-commerce, is contemplating tieups with last-mile delivery players. “We will not be directly engaged in delivery as organising fleet and other infrastructure is not viable. Our effort will be directed towards digital enablement,” he said.
Eight years ago, Natrajan’s hands-on experience in the business and the difficulties encountered led him to hit upon the idea. “The e-delivery has gathered steam as it is an alternate way of accessing liquor especially given the social distancing norms. To prevent the crowding at Tasmac shops, this could be a more prudent way of delivering liquor,” he reasoned.
Natrajan refused to comment on the prospective partners the company is in parley with, but it is learnt that HipBar is looking at partners such as the Google-backed Dunzo, Zomato and Swiggy though nothing has been formalised as yet.
In 2018, Diago had invested Rs 27 crore for a 26% stake in HipBar. “The alcohol beverage industry is set to be the next sector to be disrupted by the continued shift to digital. This investment allows us to discover ideas that anticipate shifts in consumer behavior,” said Anand Kripalu, CEO-MD, Diageo India.
Brand expert Harish Bijoor has a little more nuanced take on the matter. “E-delivery of alcohol has been the clarion call of the classy Indian. There is a class divide on this call. Taking alcohol home is taboo in the lower income group category, and managing this is going to be difficult,” he told DT Next.
A hospitality player in Chennai said it was still unclear as to how the liquor would be taken from Tasmac shops to the customers’ homes. Unlike Bengaluru, where the culture is more open, the prospect of Chennai warming up to having home delivery of liquor does not seem immediately probable, the person said, adding that they were waiting for more clarity.
Also, given that many political parties are vociferous about prohibition, there is apprehension that online delivery could bring bad publicity for the State, said an industry insider. While Chhattisgarh has a workable app-based model, Madhya Pradesh sought public opinion on the sale of wine and spirits via online channel. Unlike in the West, where Drizly and Amazon have been successful, the laws in India are still unclear.
Currently there is no legal provision for home delivery of alcohol in India, something that industry body, International Spirits and Wines Association of India (ISWAI), is lobbying to change in conjunction with Zomato and others. “We believe that a technology-enabled, home delivery-based solution can promote responsible consumption of alcohol,” Mohit Gupta, Zomato’s CEO for food delivery, wrote in a business proposal to ISWAI.
With Zomato having expressed its interest to target areas that are relatively less affected by COVID-19 as Gupta wrote in the unpublished document submitted to ISWAI in mid-April, it appears that the firm has been upping the ante to add liquor to its delivery portfolio. According to an agency report, the company has set its sights on branching out into alcohol delivery to cash in on the high demand for booze during the lockdown period.
THE BUSINESS OF BOOZE
- The margin in any other commodity that the government is selling is about 5 to 10 per cent. In the case of liquor, it is almost 75%, with the remaining going to the manufacturers.
- The revenue that Tasmac generated in 2018-19 was Rs 31,157.83 crore. It was expected to remain the same this financial year as well - before the lockdown was imposed.
- Tasmac shops in Chennai alone contribute about Rs 10 crore per day. Liquor shops in other major cities in the State get anywhere between Rs 5 to Rs 2 crore.
- When the 21-day lockdown was announced, Tasmac officials said it was likely to incur a revenue loss of Rs 2,500 cr. Now that the lockdown was extended more than double of that, the revenue loss, too, would balloon
- Bulk of the revenue from liquor sales goes for welfare schemes, including free uniforms and textbooks for students
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