Excise duty hike hits margins for sellers, liquor supply for consumers
This led to a short supply of some popular brands, said sources.
The sharp increase in the levy has left the liquor trade jittery, ultimately affecting the supply of a number of brands of affordable Indian-made foreign liquor (IMFL). Distributors and retailers are pointing fingers at each other. The situation is worse in centres like Mumbai and Thane, though Nagpur is also feeling the heat.
As the liquor makers have cut the wholesalers' margin in order to adjust the new prices following the duty hike, a number of traders are finding it unviable to sell liquor for small margins, leading to the short supply, said sources.
Instead of passing on the entire duty hike to the consumers, the distributors have cut the wholesalers' margin to around 2 to 2.5%, which is half of the earlier level. This was to limit the hike in the maximum retail price (MRP) of some of the entry-level brands. Miffed by this, the wholesalers have cut the credit period allowed to the retailers or permit rooms (bars) to just 15 days. Earlier, two to three months' credit was allowed.
The wholesalers say, with shrunk margins, they cannot afford such long credit periods. Now, required to pay early, the retailers and permit rooms have cut their offtake from the distributors, said sources in the wholesale trade.
The retailers, on the other hand, say it's the distributors who are not supplying enough bottles after the margins were reduced. This has typically affected seven to ten brands of whiskies and a couple of rum brands, which are now available in the range of Rs270 to 300 per nip (180ml bottle).
These are fast-selling brands from which both retailers and wholesalers get a chunk of business. Now, as the margins on these very brands have been cut, the business is no longer as profitable, said a trade source.
Had the old margins continued, these bottles would have cost over Rs300 a nip, said sources.
Rajeev Jaiswal, president of Nagpur District Permit Room Owners Associations, said, "The supply for popular brands has been low from the distributors.
The bars are managing with the existing stock. It's manageable due to the shravan month, when a large number of people abstain from drinking. However, with the Pola festival ahead, liquor demand will go up again. The stocks need to be replenished by that time."
"We just got supply after a fortnight's wait," said an attendant at a wine shop, pointing out a whisky brand. "Even other brands are not available as per demand. There is an acute shortage of 750ml bottles of a number of brands. There is no supply of 90ml miniature bottles too. For some brands, quarter bottles are not available," said the shopkeeper, referring to a rum brand.
The bar next door also confirmed a shortage of big bottles of the brands. There is no dearth of premium brands. However, the supply of the common man's IMFL has been hampered, said another vendor.
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