The Indian Liquor Industry Prohibition Story
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THE INDIAN LIQUOR INDUSTRY Cont..
PROHIBITION IN THE US
| Alarmed by the increase in drinking, gambling,
prostitution, tobacco consumption and crime in the 1910s, the US
government decided to impose prohibition. This was accompanied with the
building up of a strong anti-drink sentiment by terming alcohol as
'anti-religion' and 'anti nation.' However, the industry soon went
underground and the number of illicit distilleries increased from 95,993
in 1921 to 282,122 in 1930. The number of people arrested for bootlegging
reached 75,307 in 1928. Organized crime entrenched itself in a big way in
the business with mafia leader Al Capone reportedly making $ 60 million
through illegal liquor sales. Over 10,000 people died after consuming
spurious alcohol. Sociologists said that since alcohol was made illegal,
people drank more to rebel against a system that sought to control their
lives and choices. Ultimately, supporters of prohibition became
disenchanted with it, and in 1933, prohibition laws were changed.
Gradually, states across the US lifted prohibition, and by 1966, all the
states had abandoned it, either completely or partially. |
During 1999-00, the Indian liquor industry grew at the rate
of 10-12%. While IMFL was consumed by the middle and upper classes of society,
country-made liquor was consumed by the economically deprived classes. In
India, 40-50% of all males and 1% of all females consumed alcohol. Almost 62%
of the drinkers could be classified as light drinkers (i.e. social drinkers),
29% percent as moderate drinkers, and about 9% as hard drinkers.
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Many government restrictions regulated the liquor
industry. Companies are not allowed to expand capacity without prior
approval from the concerned state government. The government has banned
the advertising of any alcoholic product in the electronic media. As a
result, companies have resorted to surrogate advertising (advertising for
sodas and lemonades using the liquor brand name). However, some states
have even banned surrogate advertising. The satellite television channels
initially showed liquor advertisements, but were soon banned from doing
so. As a result, liquor companies could publicize themselves only through
sponsorship of sports events and contests.
The distribution of liquor was also under state control in many states, in
the form of auctions, open-market system and government-controlled
markets. Under the auction system, the government fixed a floor price for
the shops and the bidders had to quote prices. |
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The license was given to the highest bidder. States
following the open-market system gave companies substantial freedom to choose
their distributor and to determine the price and the discounts. In the
government-controlled system, liquor was distributed by state agencies such as
BEVCO (in Kerala) and the Andhra Pradesh Beverage Corporation (in Andhra
Pradesh). There were around 25,000-27,000 licensed retail sales outlets in the
country, in addition to the bars, pubs, hotels and restaurants serving liquor.
There were restrictions on the business hours of these outlets and location.
The above restrictions were, however, viewed by many critics as attempts by the
state governments to disassociate themselves from the social evils associated
with alcohol consumption. While on the one hand, the state governments imposed
many restrictions on the companies, they also earned a significant portion of
their revenues (Rs 200 billion in 2000 for the whole country) through the levies
on liquor sales.
The industry, along with the tobacco and cigarette industry thus had to cope
with government regulations and also face the hostility of those who felt that
the state should not have allowed
the trade in alcohol in the first place.
PROHIBITION IN INDIA
THE DEBATE
A PROBLEM UNSOLVABLE
QUESTIONS FOR DISCUSSION:
EXHIBIT I THE INDIAN LIQUOR MARKET
ADDITIONAL READINGS & REFERENCES:
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