Spirit-ly speaking, India has never had it so good. It’s bubbling over, it’s tipsy, flushed and pink in the face. Understandably, for there is so much champagne and wine flowing through the land it is all going to its head. And we are not even taking into account the spirits at this stage, which is making Indians so happy they are delirious! The euphoria is too much to handle. Partying was never harder. Or life, easier. For you can now buy the best of international alcobev brands right here, right now.

If you recall, it was only until recently, that tipplers were trudging back from foreign shores, surreptitiously hand carrying heavy bags through airport customs with liquid goodies which they could not obtain for love or for money even in big cities like Bombay and Delhi. Your friendly local bootlegger could supply you with some unknown wine labels, the table variety sort, but a Sassicaia or a Bordeaux Supérieur, no way! And yes, while a Johnnie Walker, Black Label could be obtained officially at a much higher price than what you could get at a duty free (well-heeled Indians have always had a penchant for this one and it was among the few imported brands present in the market), it was usually the cheaper Red Label that was easier got from a bootlegger, or a Grant, or Black Dog, maybe. But then it was and continues to be said, more Scotch was drunk in India than produced in Scotland and the danger of landing up with spurious stuff, a lemon so to say, was always imminent! No doubt a fair amount of the booze one bought 10 or 15 years ago was India’s very own brand, the Made in USA (Ulhasnagar Sindhi Association) kind: bottled near Kalyan, an outskirt of Greater Bombay. It was for this reason, that the serious whisky drinkers like Busybee, Mario Miranda, Vinod Mehta made sure they broke the empty bottles as soon as the precious content was consumed. They feared the unscrupulous hands of jari-puranawalas, junk buyers, would get to it and then sold for re-cycling. Incidentally most people buying from the black market would painstakingly study the label most minutely before actually purchasing these bottles. What they did not know is excellent printing facilities in India have been present for a very, very, long time!

However, today these issues are problems of yore.

You now have to just walk into a friendly liquor shop round the corner, in your very own neighbourhood, to pick the best of brands that a whole host of companies are now importing into India. You can spend hours in there just studying what’s available. It’s mind-boggling. And all this has happened over just a few years. Foreign whisky, vodka, gin, rum. Innumerable wines, expensive champagne and other sparkling wines, the best of liqueurs, an array of beers. Fancy Tequila? Pernod? Cognac? It’s there. Available just off the shelf. It’s only a question of money, honey. And interest.

So when did all this change happen? And why? Is it catering to a demand created by an upwardly mobile, new, young India that is emerging in a tearing hurry? Or is it just the fact that drinking which until recently was considered taboo, is now socially accepted?

Whatever the reason, it appears the trend is here to stay. inspite of all the ridiculous import duties and excise taxes. That is the common consensus of every top notch executive of most of the major international alcohol companies now based in India.

Asif Adil,Managing Director of Diageo, represents a company which trades in over 180 markets around the world and is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange (DEO). It has in its stable among others, some of the world’s most premium drinks like Johnnie Walker – Black, Blue, Red, Gold, Green.

In relation to the trend continuing, Mr. Adil is of the opinion that it certainly will “Sure, there is a very real boom in the alcohol industry. Particularly in the reserve segment. Consumption has certainly increased, it’s very evident from the industry figures.”

Param Uberoi, CEO of Pernod Ricard, a co-leader in the global spirits industry with volumes of 93 million cases, agrees. “The current boom is for real, and converts to consumption. How long it will sustain at this pace can be a matter for discussion, but given the sheer number of people coming into legal drinking age, an easier, liberal societal view, higher disposable income, with a push-up for trading and consumerism, the trends look strong.” The same is endorsed by Deepak Roy, Executive Vice - Chairman & CEO of ABD, the company which has just launched Wodka Gorbatschow, Germany’s premium vodka which is locally produced under a triple chill filtered process, which makes it the purest vodka available in India. This is what he has to say, “The alcohol industry has been growing at a compound growth rate of 12%.

With rising incomes and globalisation, we are expecting the industry to keep growing at this level in the foreseeable future.”

When Harish Moolchandani, CEO & MD of Beam Global was asked the question- Will the market grow? he replied it in just three little words, “Grow, grow, grow.” Mr. Moolchandani is the boss of a company which made its foray in the Indian market very many years ago, with Teachers in 1993.

But the last word on this subject comes from Vijay Rekhi, President and Managing Director, United Spirits Limited, which has added to its huge domestic portfolio of 140 brands (turnover: INR 4,000 crore or USD 1 billion), Bouvet Ladubay, wines from the beautiful Loire Valley in France, as well as scotch, Whyte and Mackay. Mr. V. K. Rekhi the doyen of this industry, is termed by many as ‘the Father of Spirits!’ Considering the number of years he has spent in this trade and the respect he commands, it is probably an apt description. His view: “Spirits demand is inelastic. The current boom extends consumption to more premium brands. India is the fastest growing spirits market. Scotches and wines are emerging categories and are the outcome of the increasing disposable incomes, liquor retailing, moving out of the closet and increased exposure to western lifestyles. Wines specifically, which targets a new consumer base including women.”

Which brings us to the question of both wine and women, meaning the new woman who is certainly now more unabashed about going out and enjoying her drink, wine or whisky. As well as the fact that there is now the new-age man, particularly the health conscious one, who actually prefers to drink wine. Which is what I think Mr. Rekhi meant when he talked about the new consumer base in the world of wine.

The best person to discuss this would be Ashwin Deo, Managing Director of Moet Hennessey, the company that brings more laughter and joy to the world than any other, simply by virtue of the fact that champagne is such a celebratory drink. Mr. Deo not only helps us acquire Dom Perignon right here in our country, he even hosts the best parties in town, as also exclusive sit-down dinners which allows us to drink the stuff in the manner it should: civilized and leisurely, paired with exquisite food.

Ashwin Deo represents all the aspirational values that the rich, young and trendy hope to acquire. What with him being the boss-man of such brands as the already mentioned Dom, Moet and Chandon, Krug and Veuve Clicquot Ponsardin. If that wasn’t sufficient, there is Cognac: Hennessy, XO, VSOP, and VS. And vodka: Belvedere. To pick from among others on their list, I’d take Glenmorangie, Cloudy Bay, Grand Marnier. A huge cross section and all premium.

“For sure, I know that the demand for luxury wines and spirits is very much there. I can see the proof in figures that show the rising demand for Moet Hennessy’s vast portfolio that offers so much choice. But consumption patterns are seeing a shift. The Indian consumer who earlier saw champagne as a celebratory drink is now serving it as an aperitif too, as also something that completes a dinner experience. He/she is more particular now than ever before about likes and dislikes. They are also more willing to experiment and discover that extra special taste that suits their palate. They are not just well informed about availability, but also understand the brands they consume – the heritage and inherent quality that sets it apart from the rest and so on. Luxury is steadily becoming ‘the’ way of life, for sure”, he concludes how he began, nodding his head in full earnest.

It is evident enough and we can all quite easily see that the upper crust Indian is certainly more discerning and coming into his own.

Beer which meant London Pilsner or Haywards until recently, now has rich companions. Carlsberg, Cobra, Heineken, Tiger, Fosters & Peroni. We are spoilt for choice. The man making a dent on the beer scene with the recent launch of Carlsberg Pilsner, is Pradeep Gidwani, Managing Director, South Asia Breweries - the Indian arm of Carlsberg. The company is basically producers of beer, ale and wit. And if you have to hazard a guess regarding the turnover of the parent company, I am sure you will fail the test, so I may as well

supply you with the figure – USD 10 Billion! With its headquarters in Copenhagen, Denmark, the group’s broad portfolio of beer brands include the best in the world. And they have a beer for every occasion, lifestyle and palate.

It is generally presumed that beer until now was vastly drunk and pretty freely all over India, in big cities as well as small towns. I asked Mr. Gidwani if he saw any changes in this trend, for better or for worse. “For the better!” he shot back. “If you notice, across the world the trend is to move from traditional brown spirits to lighter alcoholic beverages products including beer and wine.In India there are many key drivers for the growth of beer-drinking. Younger population is the first one. There is a changing social lifestyle, more people are now eating out in restaurants, going to pubs, bars, which includes a segment that was miniscule earlier: women, taboo on drinking is disappearing. Beer is a no fuss drink, suitable to our hot climate and spicy cuisine. All these factors are conducive to beer drinking and have helped sales.”

Apurv Nagpal from SABMiller has the same opinion. “The beer industry has been showing consistent double digit growth in the last few years, because young people (over 21 years) certainly opt for it over hard liquor. They percieve it to be healthier, safer, less harmful, more modern, etc. If the govt were to recognise this as well and amend the excise policy which currently drive people towards hard drinks, this growth would accelerate further.”

Poonam Chandel, the Managing Director of Cobra Beer India, voices the same. “Cobra India has witnessed over 600% growth since its launch in India. It has a market share of 1.5% to 2% ranging from market to market and we are targeting a market share of 4%.” Incidentally, UB has the biggest market share of beer at almost 70% and SAB Miller, 20%, but these also include their indigenous beers and are not included in this article which is only about foreign brands.

So while the wines and spirits industry is poised to flourish and may be growing at break neck speed, it is not altogether without its share of problems. It is in fact fraught with issues of the government kind. Namely taxes. And policies.

Sid Banerji of Kyndal India, the group which has under its umbrella, brands like Mackay Scotch, Dalmore Single Malt, Jim Beam Burbon opines, “The industry requires a rationalization in the tax structures. Now with imports being allowed, a level playing field has to be developed where all players have an equal opportunity. In areas like wine and beer, the policy needs to change and distribution policy should be more liberal so it encourages low alcohol consumption. Taxes and excise duties should be lowered and brought on par with other non-alcoholic beverages.”

Dharti Desai of Finewinenmore, which offers a wide bouquet of wines from its 140 labels, in addition to a premium champagne which is Canard Duchene and top quality liquors such as Martinique Rum, Grappa, Limoncello, also laments and rather vehemently at that, at the unfairness of it all, specially for a new entrant like herself. “India continues to be crippled by bureaucratic challenges for the imported segment. The insane import duty structure at 162%, with 200% on assessed value – although only in Maharashtra, puts an importer of mid to premium range wines in a tricky spot. The supply chain is unnecessarily complicated and exposes the wines to unhealthy delays in customs, warehousing at the port, etc which in turn effects the wine. Transportation conditions are no where near optimum level and we have to spend additional money to ensure temperature controlled storage and transport. All these costs leave practically no margins for the importer to survive on. All I can hope for is that eventually there will be enough pressure from the consumer and powerful trade bodies like the WTO (World Trade Organisation) and EU (European Union) to help remove all these ridiculous restrictions.”

Jackie Matai of Aspri Spirits Pvt. Ltd, with 15 years experience in the Indian wine and spirits scenario, specially in tracking the dynamics of the market place is also of the view that we can do much better should liquor policies improve. “Despite the reduction in the customs duties, the procedures have not been simplified and therefore one does face several stumbling blocks. With local excise policies in each state, some states have been keeping a track on consumer demands and have conducive policies which in turn maximize the state exchequer, but at the same time other states have been very rigid which is detrimental to their coffers since it does not allow the end consumer to savour the international brands which due to all these taxations becomes very expensive and goes out of their reach.”

Pradeep Gidwani also rues, “ Alcohol is governed by the State and therefore selling in India means that one has to deal with laws of over 30 different regions. Moving product interstate involves import taxes, CST, and export taxes. Further beer is heavily taxed in India. In Europe beer, soft drinks, water sell to the consumer at about the same price.”

Deepak Roy continues with the general refrain, “Duties in India are among the highest in the world and worse, vary from state to state. Given that alcohol is a non-essential commodity, it seems absurd that the government has to resort to price controls. The government should let the market/competition decide prices. Import duties have been going downwards over the last few years, but currently at 150% it is still too high!”

And what do the bosses of the three big players of the country – Pernod Ricard, Beam Global and Diageo have to say about the exorbitant duty structures?

Param Uberoi: “The regulatory environment remains a key bottleneck area and government levies remain high and unpredictable. They can have a sudden and very strong impact on business. It’s scary.”

Harish Moolchandani: “Though duty is high, significant progress in policies seems to be taking place. But sometimes it moves two steps forward, four backwards or one step forward and three back. But I am optimistic. The government also knows that better relaxations will lead to higher consumption and the industry will therefore generate and contribute more to the exchequer.”

Asif Adil: “The two big challenges are the high customs duties – the highest anywhere in the world, and the varying state excise laws. The industry and the government will benefit from a harmonization of the state excise structure. Supply side economics do lead to more tax revenue and lower prices for the consumers. It’s a win-win for all. The country needs a uniform tax structure. This will make it a level playing field for all: Domestic players, international players, distributors and most of all the consumer will benefit from such a move. This kind of move will also reduce cross border illicit transfers and counterfeit products.” Sound advise, I hope those who are responsible for these policy making and tax structuring rules will pay heed to Asif Adil’s words.

Phew! After listening to the tales of woe of both, Big Daddies and aspiring toddlers in the industry, and trying my best to come to grips with all the intricacies and goings on in the trade and understanding the wheels within the wheels scenario, my general state of oh-I-feel-so- good-my-country-is-on-the-upward-move, seems to have got a pin prick. But in spite of all this babu-ism, I am hopeful about a positive outcome. At 45,000 crores turnover, which is what the powerful alcobev industry is all about, and a young and very aware of their rights, expressive new consumer who is waking up, somebody will have to sit up, take notice and make corrective measures. To that I say, “Cheers! And let the good times roll!”