ALCO-BEVERAGES IN POST COVID TIMES

[Dr. Sanjiv Agarwal]

Since the outbreak of Covid pandemic in March, 2020 of which India has already witnessed three editions, last one in December, 2021-  January, 2022 in the form of Omicron, a complete metamorphosis has taken place in all walks of life- be it businesses, life style, entertainment food & beverages, or alco-beverages. The industries including the alco-beverages have witnessed a bumpy roller coaster ride @ 360 degrees- in terms of volumes, sales, production, consumption, distribution, product mix and what not.

Various global agencies and economic forums have predicted that the present situation is much better and is likely to continue or improve. With continuous rise in vaccination in India and globally, the impact of Covid is already getting mild or diluted with time.

In India, the vaccination in adults has been phenomenal and that provides the much needed solace. The businesses are returning to normal or in other words, to pre-Covid levels and that too on a positive outlook for future. With signs of recovery and bullish trends across the board, alco-beverage sector also hopes for the return of good old days.

Alco-beverage sector got heavily and adversely impacted due to Covid bringing down everything to halt-production, distribution and of course, consumption. Government policies in term of abnormal taxation added to the woes.

Now that things are turning to normal, liquor industry is in high spirits and ready to chill out, once again. With hotter summers, consumption is going to peak and industry is likely to boom with increased sales. Most of companies have already posted good performance in financial year 2022 just passed. This applies to all- beer, whiskey, vodka or gin etc. This only indicates the sharp recovery after a steep fall in recent past. Both, the increased consumption at home and restaurants reopening at full strength, has added to the boost in alco-beverage sector. The growth at different companies has been in the range of 15-40 percent. The enhanced performance in top-line and bottom-line yielded positive reflection on stock markets too with most of the listed companies seeing buoyed volumes on stock market and increased market capitalization.

We have just witnessed the GST collection figures for April, 2022 which are the highest ever since introduction to Goods and Services Tax (GST) in July, 2017. The GST collected is phenomenal, given the present background which indicates that it still has enough steam to go up and up, once our economy, which is the fastest growing economy, fully opens up. The GST collection in April, 2022 is Rs. 168000 crore, all time high by being Rs. 25000 crore more than the highest collection of Rs. 142000 lakh crore in March, 2022 so far.

GST collection across the board and various states indicate overall growth in consumption and demand of various goods and services. This though not directly, but indirectly also reflects growth of alco-beverage industry. Infact, this sector contributes both to states in the form of state excise duty, which certainly has grown, and to the Union in form of GST paid on all inputs and services on which no input tax credit (tax credit set off) is availed by this industry. This is so because alco-beverages  are not under the ambit of GST. Thus, the role of alco-beverages industry too cannot be undermined in GST collection. The revenue collection in all large liquor manufacturing and consumption states has shown positive signs.

2022 and beyond are going to be growth years for this industry which may also see more brands, collaborations, new products and innovations in customer satisfaction or delight. State Governments should come forward and offer the desired incentives besides having industry friendly and customer centric tax and excise policies. The changing pattern in consumption, more so in relation to gender and age will also be a major factor in growth.

In the present situation, liquor industry should embark upon better cost management to make blocked credits and no- ITC inputs more cost effective as well as explore some business propositions which are under the GST net.