‘Prohibition does no good to any stakeholder’
Raju Vaziraney, President, SOM Distilleries & Breweries Limited
(Chairperson of the session)
Prohibition is largely politically motivated. Certain individuals do it for their vested interests without caring for the three stakeholders – the consumer, the liquor industry and the exchequer. While the exchequer loses money, the people running underground liquor trade make quick money illicitly.
Unfortunately prohibition is not deliberated or discussed with the industry, and political people take decisions without understanding the implications of prohibition. For example, prohibition was clamped in Haryana in 1996. But it had to be lifted after some time. The irony was that the Haryana government lost Rs 1200 crores due to prohibition and all the people who thrived by selling liquor illegally became mafia and bootleggers and they still damage the liquor trade in Haryana which is an important state bordering Delhi. The industry has not come out of it even 20 years after the lifting of prohibition and we suffer lots of payment loss. OTC sale is not there of the brands because they are sold across the border.
Let me tell you about the prohibition in Andhra Pradesh. There was a brand called Old Tavern when I used to work in Shaw Wallace. Old Tavern used to sell lakhs of cases per month before prohibition but after prohibition it vanished because the company was unable to put as much stock legitimately as was required in the illegal market. Good brands got killed during prohibition because illicit brands and small regional brands prospered without ensuring any quality and without any brand promise. And, the consumer had to drink substandard quality. Ultimately the consumer gets shifted from premium to semi-premium or even lower category.
Another interesting case is of Mizoram which was dry for so many years but privately people admitted that it was the “wettest dry state”. When the consumer is getting liquor, why hide it. It is important that the consumer or the industry or the exchequer should not suffer because of the arbitrary ad hoc decisions.
The latest prohibition in Bihar was a politically motivated decision. Till the end of March, the Bihar government was expected to run about 650 shops through a small corporation to ensure legitimate consumption of liquor and stop country liquor. But on April 4, the government suddenly announced total prohibition. This led to hundreds of thousands of cases lying in the godowns going waste. Crores of rupees of the industry got stuck. But the consumer is getting all the stuff from across the border though he is not sure of what he is drinking.
Even the forces personnel bore the brunt of prohibition. There is a huge SSB canteen in Patna which serves Bhutan and Nepal. The canteen takes 10000 cases per month. But it was also not allowed to keep any liquor stock. When an officer or a soldier joins the Indian army he knows liquor is his perk, his right, his staple food. But now he is not allowed to drink.
Companies like Molson and Coors have also suffered. It had set up a beautiful state-of-the-art brewery in Bihar but it went dry because of prohibition. In the context of Bihar prohibition, Carslberg MD had reportedly said that he did not want to do business here.
On the one hand we say ‘make in India’, on the other hand state governments have their way. People have lost jobs, crores of rupees have stuck and stocks have been lost. There is so much lack of confidence among the investors with respect to Bihar. Instead of 4000 crore rupees going to the exchequer maybe now 3000 crores will go to the grey market.
The industry must have a strategy how to avoid such a motivated decision which is ad hoc and which is dangerous for all the stakeholders.