May 12: Maharashtra, West Bengal and Odisha governments of the wine producing regions in India and now Chhattisgarh have allowed home delivery of wine and liquor in their states during Covid, setting a precedent for other states in the country to follow, including Delhi, writes Subhash Arora who gives a recent example of Michigan State in the US where the distribution is complex as in India but generally handed smoothly for the States as well as the consumers, and strongly recommends Online Sales within every State
The Michigan Liquor Control Commission filed lawsuits in Michigan federal courts against wine companies in California, Oregon, New York and West Virginia, claiming they were breaking Michigan liquor laws by illegally shipping alcohol directly to consumers.
The state pleaded that the companies cease and desist importing alcohol into Michigan, the release stated, but the companies continued to ship to Michigan customers, violating both the Michigan Liquor Control Code and the Michigan Consumer Protection Act.
Michigan law requires beer and wine to be channelled through licensed wholesale entities for distribution to retail locations. In limited instances, a manufacturer may ship wine directly to consumers, but only if it is licensed to do so.
But unlicensed companies often skirt the state laws and import thousands of cases of wine into Michigan illegally, allowing minors to procure alcoholic products easily with the officials having no effective means to ensure that the imported products are safe, besides the State losing out heavily in tax revenue.
Nearly one-third of every bottle of alcohol shipped into Michigan in 2019 was shipped illegally. About 200,000 cases of alcohol were shipped into the state out of which over 60,000 cases were shipped illegally, according to a News report.
Relevance to India
The case filed in the court last week has some bearing on the wine distribution system in Federal India where States have the freedom to control the distribution and pricing of alcoholic products like wine and liquor, similar to the complex American system where each company in the principal wine producing state like California, Oregon, Washington and New York have to conform to the laws of the States where it is imported.
Online Sales have been never allowed in India till the pandemic stuck last year when Maharashtra and Odisha governments allowed the home delivery of liquor by wine shops within the State, making the producers and importers rev up their delivery system and online information, making it possible for the consumers stuck in their homes during lockdown to get their favourite tipple online through a licensed retail shop. A few other States followed too.
According to a notification last Saturday, the Chhattisgarh government has allowed home delivery of up to 5 liters of alcohol through the State liquor monopoly- Chhattisgarh State Marketing Corporation Limited (CSMCL). The consumers may place the order via the government app on their website. For an additional cost of Rs 100 home delivery may be made within 15 kms of such liquor stores. The decision has been taken ostensibly to prevent illegal manufacturing and black marketing during the ongoing lockdown; wine is neither produced nor is the favourite tipple in the State.
Licensed Retailers and consumers are happy with the decision in these States where Covid-19 protocols can be observed more strictly and the people don’t die consuming illegal liquor which could be hooch or even products like sanitisers that have high alcohol content.
Time to allow Online Sales
Despite the archaic excise laws in the States which perpetrate bootlegging and make the difference between life and extinction of small businesses, Online Sales- of at least low alcohol products like wine and beer, would not only yield the States more revenues which drive the wheels of their economy but also keep the consumers happy.
The current system in the likes of Maharashtra, Odisha and Chhattisgarh States, makes it a distinct policy for other States to devise an Online Sales Policy. According to the Paris- based Organisation of Vine and Wine (OIV)-of which India is also a privileged member nation, a majority of the countries survived the pandemic because of online sales and wine tourism. In fact, Brazil's wine industry, which is similar in structure to India and allowed online e-commerce distribution system early into the pandemic, recorded an increase of sales of over 18% last year.
Unfounded fears
There are principally three issues that are hurdles in allowing Online Sales- leakage of revenues, advertising and selling to the legally under-aged. The issues have been resolved in Odisha and Maharashtra- by making online sales possible through licensed retail wine shops. For instance, one importer in Mumbai and another in Retail we talked to, have been smoothly running the business because of Online Portal and the licensed shop.
Both have a license to retail and are within the full purview of the excise department. They are allowed to sell only within the State; it would not be practical to allow Sales out of the State because of the excise revenues sharing. The customer has to upload documents like the Permit or an Aadhaar Card. Delivery boys being from the same organisation, ensure that the delivery is made to the person placing the order-and checking the age of the recipient. In States like Chhattisgarh where Distribution is controlled by a Monopoly, it becomes even easier to control. The license is at the risk of cancellation in case of default.
However, it might be more prudent to not allow the third party deliveries for better control as some States considered allowing through app based delivery companies -like Zomato and Swiggy. According to an importer, they flex their muscles and demand hefty commissions because of their size and do the arm-twisting as they have been doing for the restaurant industry. With very low margins, they are not in a position to bend to these demands.
Orders may be placed on a portal run by a licensed shop-thus giving a wider choice to the consumers. To avoid online frauds, details of such online retailers may be prominently displayed on the website of the excise department and no advance payment except with credit cards should be allowed; COD could be permitted. The Online Portal should be only informative with no room for advertisement- certainly not more than what one already sees in the existing Retail shops.
If the pandemic has taught us one thing, it is that new solutions need to be found for every problem. Limited Online sales-within the State through a licensed wholesaler with a designated Retail would make it convenient for the consumer and will earn the State more revenues. If successful, it may be extended to premium liquors only, in order to avoid excessive consumption. With a positive framework and the endless possibility of educating customers on the possible harms of excessive drinking, the anti- alcohol message can be even better delivered.
Subhash Arora
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