With liquor manufacturers taking a decision to turn off the tap from Monday, Kerala, with the country's highest per capita consumption of 8.5 litres a month, could soon turn dry,

The manufacturers follows the State government not revising liquor prices though the costs of most raw materials have shot up above the sale price of a bottle of liquor.

Festival dampener

The crisis in the liquor industry breaks out just a couple of weeks before the Onam festival, when liquor sales in Kerala peak. “This is not to arm-twist the government; manufacturers are left with no choice because the input costs are high and it is not possible to purchase the material at high prices and let it harm the business,” said sources from the Association of Distillers, Brewers and Vintners of India (ADBVI).

The move comes a day after the Kerala Bottlers' Federation (KBF), which represents distilleries in the State, urged the Kerala Chief Minister, Mr Oommen Chandy, to consider revision of prices.

Suppliers in Kerala receive orders for 80,000 cases of liquor a month, at an average price of Rs 450 a case. And from every Rs 100 worth of liquor the government sells, it pockets Rs 85, the remaining shared among the manufacturer, the wholesaler, the retailer and others in the supply chain. A stoppage in the manufacture of liquor - a money spinner for the exchequer - is expected to hit the State government hard.

A member of the Distillers Association pointed out that the government will have to manage the demand internally as it has an agreement with suppliers in Kerala that does not permit the government to purchase liquor from suppliers outside the State.

Mr T. R. Vijaykumar, President, Kerala Bottlers' Federation told Business Line: “The Government is expecting revenues of Rs 7,500 crore from the industry this year compared with Rs 7,000 last year, but this will be affected when manufactures stop taking orders hereafter.” Some of the major listed liquor manufacturers in the State include United Spirits and Radico Khaitan.

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