The spending behaviour of Indians after the lockdown is removed is an interesting topic to study. While essential products and services will be high in demand, there are few products that people are desperately looking to buy amid Lockdown, and alcohol is one among those. But is this the product that people would be spending the most during the rest of the year?
A new survey from Nielsen India finds that more than 42% Indian consumers will be cutting their spending on alcohol and cigarettes post-lockdown. The coronavirus pandemic in India made budget cuts and discretionary spending the new norm, and Indians are looking to spend less and save more.
The non-availability of alcohol and cigarettes was a key factor in a lot of people choosing to use this time to quit smoking and drinking. Further, post-lockdown, bars and pubs may choose to continue following social distancing norms, which will have a significant impact on the overall spending.
The survey has also found that 64% of consumers plan on restricting spending on restaurants and movies, rather eating home-cooked meals. Restaurants are also preferring take-away and delivery than dine-in options. Spending on health and hygiene products, medical needs and fitness will take precedence over fashion, personal grooming and home decor.
Automobile and Transportations is another sector that would be affected badly as over 50% of people also preferred to stop spending on automobiles and transport.
A few days back another study revealed the buying preferences of Indian shoppers amid lockdown. Electronics and Gadgets would be high in demand as 43% of Indian respondents expressed the need for electronics devices, such as Laptops and Smartphones, more than ever before.
Zero Sale of Cigarettes and Alcohol
Since the lockdown was first implemented on March 24, production and supply of liquor and cigarettes were halted. Two of the major cigarette manufacturers, ITC and Godfrey Philips India has already suspended the production and distribution of cigarettes in India.
According to the Union Health Ministry, the use of tobacco and alcohol during lockdown can affect immunity as well as mental health. Hence when the lockdown was extended, the government decided to ban the sale of liquor and cigarettes.
This led to zero sales through white channels for alcohol and cigarettes both, in the entire month of April. During the same month last year, the sales growth in alcohol and cigarettes clocked 9% and 2%, respectively. Industry executives said there may be a surge once lockdown restrictions ease, but the sales will not be able to come up to last year’s numbers.
There will be a 12-15% YoY decline in alcohol sales by the end of 2020, said the Confederation of Indian Alcoholic Beverage Companies.
The Exorbitant prices Are Driving Black Market
The banning and halting of production, however, did not stop many consumers to buy alcohol and cigarettes from the grey market at manifold prices. Existing cigarette inventory with supermarkets was exhausted early and the smaller grocery stores and paan shops are raking in extra profit.
A pack of Benson Hedges cigarettes, sold at ₹300 originally, is going for no less than ₹500. Loose cigarettes, originally ₹17, are sold at ₹25-35 now. Alcohol rates are even higher. The cheaper liquor, sold at ₹70 per 180ml bottle, is being sold at ₹600. And a full bottle of the same liquor is price tagged with ₹3000.
However, a lot of these people are being nabbed by the cops for selling or buying illegally. A man in UP was caught smuggling alcohol in milk containers while in Bengaluru, two were arrested for selling ₹30,000 worth of cigarettes online. In Delhi, 7 people were booked for carrying illegal liquor.
Is banning alcohol and cigarette sale the solution?
All these measures have led to a scarcity in cigarettes and alcohol. Within the first week of the lockdown, the adverse impact of alcohol non-availability led to suicides all over the country. In Telangana, around 10 people died, and 300+ were admitted to the Institute of Mental Health in Hyderabad, due to withdrawal symptoms. Assam saw 2 deaths and Karnataka saw 7 deaths. In Kerala, 8 suicides were registered by March 30, leading the CM to allow alcohol sale to people with doctor prescriptions.
The states across India are setting up measures to handle the increasing alcohol withdrawal cases with Tamil Nadu’s District Mental Health Programme issuing guidelines to medical offices and psychiatrists on handling the victims. Kerala’s anti-narcotics campaign, Vimukthi, plans on expanding its facilities.
The ban on alcohol has also affected the revenues of states like Karnataka. Punjab has issued a formal request to the centre to lift the ban on alcohol, while other states like Karnataka, Maharashtra, Haryana, Rajasthan, Kerala, Tamil Nadu, Goa and the northeast have informally raised the issue with the centre.
With the lockdown most likely to continue past May 3 in hotspots and major cities hit by the pandemic, it is unlikely that the alcohol ban in these areas will be lifted.