KOCHI: It is proving to be a slow brew! Reform of Kerala’s liquor sector has been beset by challenges. While many other states have been toasting their alcoholic beverages (alcobev) industry, including introducing online sales, Kerala has encountered difficulties in implementing even incremental changes in production and distribution.
The recent controversy surrounding the introduction of online sales — initially proposed by state-owned Kerala State Beverages Corporation Ltd (Bevco) only to be retracted by the excise minister — highlights the state’s cautious approach to reforms and modernisation, compared with other regions.
A veteran hotelier highlighted how anti-liquor activists, including religious institutions, are quick to attack changes to the liquor policy.
“Both the UDF and LDF governments are reluctant to enact reforms in the sector, even when they recognise the necessity and benefits to consumers. False narratives about ‘drowning the state in liquor’ or over-reliance on liquor revenue instil fear, despite Kerala having a low number of retail outlets compared with other states,” he told TNIE.
The hotelier also noted that while the state grapples with mass youth migration, most cities lack a vibrant nightlife, with liquor retail outlets closing at 9pm and bars at 11 pm -- even on weekends.
“Kerala has a poor retail network -- with emphasis on government-owned, hole-in-the-grill outlets rather than modern walk-ins -- that stocks a limited range of beer products. The low number of chillers also limits the availability of cold beer. This is in sharp contrast to other states where alcohol retailing has evolved and modernised dramatically over the last decade,” Vinod Giri, director general of the Brewers Association Of India (BAI) said.
Kerala’s retail deficit
According to an industry report, Kerala has the lowest ratio of retail liquor outlets in the country, at 0.8 per lakh of population. In comparison, Uttar Pradesh has 2.9 retail outlets per lakh, Tamil Nadu has 6.8 outlets, and Karnataka seven.
Kerala has only 0.8 retail outlets per 100 sqkm of area, which is also one of the lowest in the country.
“Unused production capacity amongst bottling units in Kerala is over 50%,” points out Gautom Menon, senior advisor of Palakkad-based distiller SDF Industries. “Despite promises of export reforms in the government’s abkari policy over the last three years, the file hasn’t moved. This is despite a favourable report submitted by a team led by the MD of KSIDC and senior excise officials. India’s liquor export value was nearly $400mn last fiscal year, with Kerala’s share being just under $2mn. This is an embarrassing statistic,” he said.
Gautom pointed out that Kerala could consider allowing low-strength liquor -- up to 20% alcohol by volume (ABV) -- for local state licensees, similar to policies in Maharashtra, Madhya Pradesh, UP, and other states.
He suggests this could boost state revenue by over `2,500 crore and reduce contraband sales and drug abuse. A government order (GO) was issued to amend the Abkari Rules, but the tax structure hasn’t been finalised yet,” Gautom pointed out. “The state has very few on-trade licenses and offers a relatively poor consumer experience, both in terms of ambience and product choices. In the only state of consequence that doesn’t even have an elementary offering like draught beer, other innovations are a far cry. This situation not only stunts the hospitality sector, which limits employment and economic opportunities, but also prevents the state from tapping into its real tourism potential. What’s beaches without beer!,” Vinod added.
It’s not that the state government isn’t aware of this or isn’t thinking of getting things moving, but the pace of change on the ground can surely be much faster, he stressed.
Bevco proposes, govt disposes
According to Bevco managing director Harshita Attaluri the corporation has proposed many reforms which are awaiting the state government’s approval. “We have proposed introduction of draught beer and microbreweries, which are yet to be cleared,” she told TNIE.
The retailer has also proposed introduction of low-strength liquor.
“Some of the outlets are inaccessible and poorly maintained. We need to change them as soon as possible,” she said, adding that Bevco has plans to modernise its outlets.
With the government rolling back the proposal on online deliveries, the corporation is developing a mobile application for pre-bookings.
“The app will allow consumers to book products and take delivery from outlets... Perhaps this can be expanded for online deliveries in the future whenever the government approves it,” she added.
Excise Minister M B Rajesh emphasised that the government has already introduced several reforms, with more in the pipeline.
“In recent years, we’ve opened super-premium outlets, reduced dry days, and launched wine parlours in tourism destinations. Soon, we’ll expand the number of premium and super-premium outlets,” he told TNIE.
Rajesh also highlighted advancements in production, such as enabling wine manufacturing to benefit farmers.
“Wine taxation has been finalised, and we’ll soon sell locally produced wine. We are constructing a brandy production unit at Malabar Distilleries Ltd in Palakkad,” he noted.
However, he cautioned that in Kerala’s context, excise reforms must be approached carefully after thorough consideration.