Andhra Pradesh Gears Up for Sales Surge with New Liquor Policy
State to Lower Prices, Encourage Private Retailers to Drive Investment
Andhra Pradesh’s (AP) newly introduced liquor policy is set to reverse the sales decline seen over the past five years, positioning the state as a top liquor market in India, according to industry experts. The state cabinet, on September 18, approved the inclusion of private players in retail liquor sales and announced plans to reduce prices, promoting investment and boosting competition.
Key Policy Highlights
- Lower Prices and Simplified Tax Structure: The excise ministry has proposed reducing the number of tax heads from 10 to 6 and reviewing basic prices within 90 days, overseen by a tender committee led by a retired high court judge. The objective is to rationalize prices and create a more transparent tax structure, making it easier for retailers to manage tax obligations.
- Investment Surge Expected: The policy is projected to bring significant investments into the state’s brewing industry, with each brewery costing between ₹300-500 crore. The move to private retail is also expected to reverse the 60% decline in beer sales caused by the government-controlled retail system, which lacked proper cold storage equipment.
“The absence of chillers and the high taxes under the state-run retail system severely impacted beer sales,” said Vinod Giri, Director General of the Brewers Association of India (BAI). “With private retail, there’s a natural incentive to purchase, stock, and sell beer appropriately, which should revive sales.” - Online Lottery for Licenses: Licenses will be allocated through an online lottery, with four categories of licenses available. Fees for shop licenses will range from ₹50 lakh to ₹85 lakh, and shop owners will be entitled to a 20% profit on sales. Additionally, 12 premium shops will receive five-year licenses, each costing ₹1 crore.
- Affordable Liquor to Combat Illicit Sales: To curb the demand for illicit alcohol, the government is introducing low-priced liquor options at ₹99 or less. This move is expected to provide affordable alternatives for low-income groups while encouraging national suppliers to introduce brands at similar price points.
Reviving the AP Liquor Market
The liquor market in Andhra Pradesh had halved over the past five years, driven by consistent price increases and the state’s preference for local players. However, the new policy is set to reignite the market by attracting national and international players and reviving beer sales.
With the policy coming into effect from October 1, analysts predict significant market share gains for larger alcohol companies. The shift to private retail, combined with a more affordable and streamlined tax structure, promises to reinvigorate AP’s liquor industry, making it a key growth market for the sector.