India is on course to allow the alcohol business to go for the E-Commerce channel, but the move comes with a bottle full of risks and challenges in a country where the market has traditionally been rigged and not easy to control.
After China and Russia, India is the next big liquor market in the world. With the growing population in India and also the demand for alcohol consumption, especially among the age group of 15-25, the beverage industry expanded its supply by going online.
E-commerce is one of the biggest platforms or open digital spaces, where sellers and customers interact with ease and vice-versa. The alcohol industry entering digital space makes it easy for them to commune with customers all over the world. Not only that, it allows the beverage industry to expand its opportunities by learning about the needs of the customers.
According to the recent research reports by IWSR drinks market analysis, 1.8 per cent of the overall global beverage value is now sold via E-commerce channels. Now, doing business would be much easier for the alcohol industry. Earlier, this was not the case, where plenty of people used to fall sick every year because of second-rate purchases of alcohol in places with legitimate curtailments.
Alcohol Consumption In India Is Touching Skies
Despite the troublesome laws and regulations, the consumption of alcohol in India escalated in 11 years. Lately, Coherent Market Insights report stated that the value of the Indian alcohol market in 2018 is estimated to be Rs 2,807,236.6 billion. And this figure is expected to be Rs 5,482,851.3 billion by 2027, at a fast pacing CAGR of 7.8 per cent.
Furthermore, as per the study by Research and Markets on changing behavioural patterns of Indian Alcohol consumption, the estimated consumption of alcohol would reach up to 16.8 billion litres by 2022. The report also says that the alcohol industry in Indian markets is growing at a CAGR of 8.8 per cent.
The WHO study also shows that India’s consumption was 2.4 litres per person in 2005, which surged up to 5.7 litres per person in 2016. By looking at the figures, it can be presumed that there is always a growing market and an opportunity for the alcohol industry in India to augment their sales and revenue. Additionally, the alcohol industry’s online presence would add supplemental revenue to the state-wise proceeds.
Route-To-Market Easy With E-Commerce
Considering E-commerce as one of the biggest opportunities for greater revenue generation, the India alcohol industry could find an easy route to push consumption to the next level, albeit with risks. Also, the trends in the Indian market have been rapidly progressing with a country comprising not less than half of the millennial population.
Apart from plenty of constraints, the drinking-age consumers are increasing rapidly, which is a blessing for the alcohol industry. Not only that, but the route-to-market has become easy now, which means you could get your favourite drink at your doorstep by ordering them online.
On top of that, the current young generation is more tech-savvy, and almost everyone has smartphones and access to the internet. Deducing from the previous excerpt, players could postulate consumers, especially millennials, to buy beer online, just like they order other products.
Government’s Major Concern Is The Revenue
We all know that one of the major earnings for the government comes from the alcohol industry. But states have the power to control the amount of revenue streamed through it. Additionally, E-tailing will make a major contribution to the economy, in terms of revenue generation and escalating sales.
As per the latest reports by Statista Research Department, “In the fiscal year 2019, the total income of United Spirits in India was approximately 90 billion Indian rupees, up from about 84 billion rupees the previous fiscal year”.
Now Every Day Is A Weekend-Day
Gone those days, where one used to sit down and watch a film with their family on weekends. Today, with an evolving lifestyle and attitudes, higher disposable incomes, luxurious spending, and the burgeoning late-night party culture have protruded constant demand.
As said, everything is interlinked to one and another, the aforementioned culture is closely linked to the corporate world. However, irrespective of the weekday, the rampant growth of pub-culture among the working class is one of the common practices to ease the stress from work. Deadlines, constant monitoring, burn-outs are other reasons behind adopting this western culture.
The Unavoidable Vices
But the inexorable contrary side is always overlooked. For instance, the legitimate age for drinking differs in India from 19-25, but some reports state that the drinking age has reduced to 13 years. In countries like the UK and Australia, the average age to consume alcohol is 18 years. Although, the drinking-age alters from country to country.
Not only that, but drunken-driving on capital roads, especially in the cities like Delhi has increased excessively over the years. As per some facts stated by Community against drunken driving, “70% of road accident deaths in India are caused due to drunk driving. 60% of underage consumers procure alcohol from govt & private liquor vends. And 65% of persons in the age group 18-25 years do not comprehend the danger of binge drinking”.
Also, one of the research studies conducted by CADD states that “nearly 62% of these youth are in the age group 14-21 years even though the minimum legal drinking across major cities varies between 21 -25 years”. Further, a report by WHO said that India reported 2,60,000 annual deaths due to alcohol consumption.
Lack Of Formulated Laws Impacts Today’s Youth
Today’s youth are tech-savvy and enthusiastic. Along with that, the explosion of the rapid usage of smartphones among youth also promoted a paradigm shift in the purchasing habits of the consumers. Besides, the alcohol making its footstep online, makes it easy for youth to access liquor anytime. It means, now and hereafter, alcohol will be at your doorstep with a click away.
“The progressive states will be the trendsetters and I expect some to start this sooner rather than later.”Amrit Kiran Singh, Executive Chairman of International Spirits and Wine Association of India (ISWAI)
Yet, the government controls the sales and distribution of alcohol, which is one of the reasons for the slow acceleration of the profits in the alcohol industry. Further, regulation bodies used to control the pricing and other strategies to limit the supply of inferior quality alcohol. But, easy accessibility and availability of alcohol to youth would be a concern and discussion point. Adding to it, the underage purchases over online would be a bigger concern to the government.
India Will Need Reforms To Battle The Expected Growth In Imprudence
Above all, creating fake IDs and accounts happens in less time. And with alcohol in India, age gating risks on e-commerce will not be a big deal, where people input wrong dates, making sure that the product ordered reaches them rightly. However, one of the effective ways to battle with such consequences is through laying down proper reforms to curb the imprudent consumption of alcohol.
Also, the WHO report based on 112 studies of the effects of alcohol tax, suggests a solution to keep taxes high, so that drinking goes down – including among problem drinkers and youth. Additionally, there should be proper regulation bodies to track online purchases, by making proper verifications. Further, there should be a limit order system for products like alcohol, where the orders shouldn’t exceed the specified limit-count on a single ID/per day.
Therefore, retailers, restaurants, bars, and delivery companies should take certain steps to avoid age-gating. Appropriate measures should be taken by e-commerce platforms, such as ID verification, sign on delivery of the product, etc. This makes transparency in ease of doing business, and also protects youth from the risks of excessive alcohol consumption when India’s alcohol industry leverages e-commerce.