Delhi’s plan of quota-based stocking of spirits riles mid-size local alcobev companies

New Delhi: A first-of-its-kind proposal on fixed quota-based stocking and ordering of liquor by four Delhi government corporations that control supplies to the local liquor market has triggered objections by mid-sized spirits companies operating in Delhi.

Delhi is among India’s top 10 markets by sales volume of spirits.

According to the January 10 proposal by the government corporations DSIIDC, DSCSC, DTTDC and DCCWS, half of all liquor stocking at retail vends in Delhi would be set aside for companies selling nationally, 45% stocks would be allocated to regional players and only 5% would be reserved for companies that operate only in Delhi.

“Such a policy is not followed anywhere in India; it favours a few large multinational spirits players in Delhi. The proposal also does not define what a national player is,” an executive at a spirits startup said on condition of anonymity. “The proposal doesn’t leave a level playing field for local players and startups in the sector.”

The development comes close on the heels of a revival in liquor sales in the quarter to December 2024 quarter, after muted sales in the July-September period. Delhi reported sales of Rs 448 crore, with 38.7 million liquor bottles sold ahead of Diwali 2024, up 44% higher over last Diwali, data released by the state excise department on Saturday showed. These included 29.8 million bottles of Indian Made Foreign Liquor and 8.9 million bottles of beer.

Together, the four government corporations hold licenses issued by the excise department for retail vending of liquor in Delhi.

“Enforcing a quota system in the middle of the excise year to favour a few players is regressive and defies spirit of competition,” said another executive, who did not wish to be identified. “I’ve chosen to operate in Delhi as a market; I don’t want to sell in any other market as of now. How can they penalise me for that?”

The Delhi Distillers and Brewers Association, which includes more than 25 local and mid-sized spirits companies, said in a letter to the Delhi Excise Department and the four corporations that the association “strongly objects to the fixed ordering system”.

The proposal may be implemented from January 22, it said.

“The proposed policy assigns 50% weightage to national sales data, which disproportionately benefits large MNCs. Additionally, the heavy reliance on historical sales data fails to consider the dynamic nature of consumer preferences in a metropolitan market like Delhi,” said the letter, a copy of which ET has seen. “This could result in consumers being forced to purchase products they do not prefer, based solely on national sales patterns rather than local demand.”

“Consumer brand preferences differ from region to region based on their taste palates and the same cannot be generalised; in the process, local Indian players will be marginalised and international multinational companies with deep pockets will monopolise the market,” an executive of another local beer maker said, requesting not to be identified.

The proposal also seeks to cap 5% stocking for new entrants, which, according to one of the executives cited earlier “undermines the spirit of competition and creates barriers for smaller or local brands”.

The executive further said, “The proposal directly contradicts the Government of India’s initiatives to promote local brands and startups. By imposing quotas mid-excise year, it introduces unnecessary hindrances, making it difficult for new or smaller players to sustain their operations in the market.”