United Spirits Ltd., India’s biggest liquor company with a brand portfolio that includes Johnny Walker and McDowell, said home delivery and online sales will not just expand the basket size but also help more women consumers.
“In many states, women do not want to go into a retail store to buy alcohol – it’s just unpleasant. In fact, I would go to the extent of saying they feel unsafe. If you are ordering online, you will browse and you will buy what you want,” Anand Kripalu, managing director at the Diageo-controlled company, told investors during an earnings call.
For the spirits industry, accessibility is one of the biggest barriers for consumption in a market with 75,000 retail outlets, compared with over 10 million stores for fast moving consumer products. Also, after the lockdown, several stores have restricted the entry of people by placing counters in front, which could alter the display of products.
“When you start browsing in a retail store, you end up buying more than you did in an over-the-counter store. The day you start browsing on Amazon or Flipkart, you start buying a lot more things than you did and you are able to double click and get a lot more details,” Kripalu added.
Many state governments that lost revenue during the lockdown tried to boost their coffers with a tax increase after the Centre allowed liquor shops to open in the first week of May. At present, two-thirds of the retail outlets have re-opened and initially saw massive queues outside outlets. Yet, sales volumes plummeted by 33% to 90% last month in five markets that account for 40% of the country’s spirits segment due to the high taxes on liquor.
Almost a dozen states including Maharashtra, West Bengal, Delhi, Punjab and Tamil Nadu have allowed home delivery of liquor, something companies have been trying to unlock for many years. Also, Zomato and Swiggy now deliver alcohol in some states.
“Online can help companies plan activities around product development as new audience and channels can provide additional insights on changing consumption behaviour,” said Devendra Chawla, managing director of Spencer’s Retail and Nature’s Basket, which have been selling spirits for several years and started online and home delivery through select stores.
Also, the government and companies are making sure the new delivery model doesn’t bypass traditional retailers, which paid high licence fees to enter the business.
“You can’t have an Amazon kind of model in this industry because the outlets are so few and they have paid high licence fees to exist. And I don’t think any excise department will easily create a model that will destabilise the retailer themselves,” said Kripalu.