India: Bihar shutting down all liquor factories and bottling plants

Nine months after the Liquor Ban was enforced in Bihar, the State Government is moving ahead to a next level by shutting down all liquor factories and bottling plants in the state, Bihar Prabha reported on January 18.

A decision was taken in the Cabinet Meeting chaired by Chief Minister Nitish Kumar at International Convention Center in Rajgir on January 17. As per the details available, the licenses of existing Liquor bottling factories won’t be renewed after March 2017, which would automatically lead to their shutdown.

Ever since the complete Booze Ban in Bihar, analysts had predicted the closure of Liquor Bottling and Brewing Plants across the state. Most of them had setup units in the state in order to reduce the material and transportation cost. The Liquor Ban from April 2016 completely destroyed the local market for these companies.

Bihar had some of the world famous beer companies operating in the states. It has units of 6 different Foreign Liquor brands. These include Carlsberg, Diageo Plc, United Breweries and Molson Coors. These companies own more than 70 distilleries and breweries in Bihar for over a decade now, which is an ideal market for these liquor companies, offering an abundance of raw materials (barley and wheat) and cheap labour.

However, this ruling won’t impact ethanol companies who are producing it for medicine, fuels or other purposes.

The Government has proposed these companies to switch production to non-alcoholic beverages, an offer which none of them is likely to accept considering the sizeable losses they would incur after the shutdown of their plants.

“It is about just over 1% of our total business in terms of revenue and probably something similar in terms of profit right. So we believe, while it is an important state in terms of its contribution, it is not that material to our total business”, United Spirits CEO Anand Kripalu said last year.

19 January, 2017