Happy hours in UP: How state doubled booze revenue in 6 years

Time of India

3 days ago

Uttar Pradesh's liquor revenue has doubled to Rs 51,000 crore, driven by a new excise policy and composite shops selling both beer and IMFL
Akhand Pratap Dubey stands across an iron grille that guards his shop, a wad of currency notes scattered on a wooden cot beside him. Grinning from ear to ear, he just cannot believe his luck.
Akhand Pratap Dubey
' Hamari toh kismat chamak gayi. Laga jaise humnein KBC jeet liya ho (Lady Luck has smiled on me. It feels like winning KBC),' he says.
On March 6, Dubey — from Tikamgarh in Madhya Pradesh — became the beneficiary of a crossborder bonanza. On that day, he became the lucky owner of a country liquor shop in Ninaura gram panchayat in UP's Jhansi, just on the other side of the state border.
Dubey's stroke of luck came via an online lottery for ownership, which saw incredible participation.
He, for instance, beat as many as 284 others for ownership of the 120sq ft shop, in a small patch of UP that cuts into MP on the 27kmlong Niwari-Prithvipur Road.
And it was these lotteries, held after seven years, that boosted UP's liquor revenues, taking it to a staggering Rs 51,000 crore in 2024-2025 — double the pre-pandemic revenue of Rs 23,927 crore in 2018-2019.
The main reason for the state's overflowing coffers is its changed excise policy, introduced last year, coupled with the introduction of 'composite' shops — which can sell both beer and IMFL (India made foreign liquor) — which made it possible for some categories of shops to cater to a much wider clientele.
This, combined with the fact that store allocations were through lotteries, after a gap of seven years, created soaring demand, which saw as many as 15 people, on an average, vying for ownership of a single shop.
Luck Of The Draw
The lottery was held for fresh allotment of four kinds of establishments in UP: country liquor shops, composite liquor shops, cannabis outlets (bhaang shops) and model shops (IMFL and beer outlets withsitting space for patrons), under the new policy announced on Feb 6, 2024 with a single aim — to create more revenue streams and make room for the alcohol industry to grow in a stagnating market.
The online lottery draw that was organised in March and April to award 27,308 vends saw 4,18,111 applications. After two rounds of lottery, each of the 27,308 shops (16,052 country liquor, 9,362 composite liquor, 1,459 cannabis and 435 model shops) has new owners.
And UP's excise department earned Rs 2,000 crore, just through processing fees from applicants: Rs 25,000 for a cannabis shop, Rs40,000 for a country liquor shop, Rs 55,000 for a composite shop and Rs 60,000 for a model shop.
Changing Fortunes
Composite liquor shops — with both beer and IMFL on the shelves — were easily the most coveted category of outlets. One such shop, near Roza Yakubpur roundabout in Greater Noida, attracted as many as 265 bidders.
Excise commissioner Adarsh Singh says the decision to introduce composite shops was a masterstroke.
'It did bring down the number of standalone IMFL and beer shops, but also increased thedensity of outlets that serve both segments — the clientele for beer and that of IMFL,' he explains.
The department decided to shut 5,970 standalone beer and 6,563 IMFL shops. Instead, 9,362 composite shops were introduced, on the lines of MP and Rajasthan.
Sensing a windfall, existing retailers did all they could to lay their hands on these prime liquor vends, filling in forms in the name of immediate family members, close relatives and acquaintances. Even many newcomers decided to take the plunge, not wanting to be left out.
'An estimated 40% of theseshops are owned by new entrants, while the remaining have been in this business from earlier,' says UP excise minister Nitin Agarwal. 'UP is at the top spot in the country when it comes to revenue collection through excise duty. The retail liquor business in UP has become extremely lucrative, and that is why we have witnessed increased participation in the lottery this time.'
The department estimates that nearly 5.6% participants in the lottery were from other states.
Manish Agarwal, the MD of Bareilly-based Superior Industries, who is also the member of the allIndia distillers' association, says, 'The structural change in the way retail business is carried out in the state will help reach out to a larger number of patrons. The growing demand is encouraging stakeholders to come up with new brands.'
Help From 'Dry Bihar'
Prohibition in Bihar has also helped UP. Sunil Singh, an entrepreneur who used to operate a liquor store in Siddharth Nagar district, was awarded a composite liquor shop on Samaur Road in Tamkuhiraj, a town in Kushinagar, on the Bihar border.
'Though overall business prospects of the composite shop and the sales they could generate would be known only after some time, the response so far has exceeded my expectations,' he says.
'The sale is on the higher side in Tamkuhiraj, and a lot of people buy multiple bottles, unlike what I had seen in Siddharth Nagar.'
With almost a decade since the enforcement of prohibition in Bihar, retailers operating liquor vends in Kushinagar, Deoria, Ghazipur, Ballia, Chandauli and Sonbhadra have reaped handsome profits. According to estimates, from the time prohibition was enforced, the demand for country liquor and IMFL has gone up almost threefold in those regions.
In fact, tipplers from Bihar often take a boat ride across river streams that divide the two states to indulge. Many also take daily passenger trains and buses that ply between the two states.