Skip to navigationSkip to content
REUTERS/Tim Chong
You need to wait.
LOW SPIRITS

Why India’s liquor companies may want elections to end soon

By Nupur Anand

India’s on an election high—but not its liquor makers.

Not surprising, since alcohol sale is banned in India two days before the closing of polling in a constituency. Spanning one-and-a-half months, this edition of the country’s parliamentary polls has 15 such “dry days,” including the day of vote counting on May 23.

“Liquor sales volumes are expected to be affected by up to 5% in this quarter due to the ongoing elections,” Abneesh Roy, analyst at Edelweiss told Quartz.

United Spirits, the country’s biggest liquor maker, has already warned its investors that its sales will be hit in April-June this year.

The sentiment has also been echoed by restaurants and pub owners as the prohibition also coincided with weekends, otherwise the busiest days for these businesses, in certain areas.

In January-March this year, as campaigning picked pace, sales had reportedly hit the lowest level already in at least six quarters. Sales of whisky, rum, brandy, gin, and vodka are said to have grown by only 3% year-on-year.

Abstinence

Besides just the slump in sales, liquor makers have to deal with myriad other challenges in election season.

For instance, there is a slowdown in the production and approval processes as excise officials and police officers posted at alcohol factories, get posted on election duty.

The delivery ecosystem is also under stress due to short supply of trucks. As campaigning gets in full swing, heavy vehicles are usually taken up by political parties to ferry supporters and workers. On the day of the polling, in many states, even public transport is used for election duties, which has a bearing on businesses.

“This also affects transportation and delivery for liquor companies and ends up impacting sales,” said Krishnan Sambamoorthy, analyst at Motilal Oswal, a domestic brokerage house.

Hungover

It was only in recent months that the industry was recovering from the shock of the November 2016 note ban and the supreme court ban on sale and serving of alcoholic drinks along India’s national highways.

Business was picking up gradually. Pernod Ricard, the maker of Chivas Regal, saw its profits rising 28% in last financial year 2019, buoyed by strong demand for premium brands. In the October-December quarter of 2018, United Spirits, too, reported a 42.83% jump in profits.

Yet, results in the following two quarters may not be as glorious.

Read Quartz’s coverage of the 2019 Indian general election here.