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Andhra Pradesh has announced a new liquor policy that will come into effect on October 12, 2024, signaling a shift towards privatized retail sales and increased government revenue. The state government expects to generate ₹5,500 crore annually from the new policy, which aims to regulate the liquor market while offering affordable options for low-income consumers.
Private Retail Shops to Boost Market Stability
Under the new policy, 3,736 private retail liquor shops will be established across Andhra Pradesh. This shift to privatization mirrors successful models seen in other states, such as Haryana, where private retailers have been able to stabilize the market while providing competitive prices.
The policy is part of the state’s broader strategy to reverse the decline in alcohol sales, which has halved over the last five years. The government aims to bring Andhra Pradesh back among the top three liquor markets in India by fostering a more attractive and competitive environment for both national and local players.
Affordable Alcohol at ₹99
One of the key highlights of the new liquor policy is the introduction of low-priced liquor, with some products expected to retail at ₹99 or less. This move is designed to curb the consumption of illicit alcohol, which often proliferates due to the higher prices of legal spirits. The state government aims to offer low-income groups access to affordable, regulated options, reducing the risk of health issues associated with unregulated alcohol consumption.
National suppliers are being encouraged to introduce their brands at competitive price points, adding to the variety of low-cost options available to consumers. The state hopes that this focus on affordability will lead to increased sales and a more robust legal market.
Online Lottery System for License Allocation
To ensure transparency and fairness, the government has introduced an online lottery system for allocating liquor licenses. Four categories of licenses will be available, with fees ranging from ₹50 lakh to ₹85 lakh, depending on the category. This system aims to prevent monopolies and encourage wider participation from retailers.
Additionally, 12 premium liquor shops will be granted licenses for a five-year tenure at a fee of ₹1 crore. These premium outlets will cater to high-end consumers, offering a broader selection of premium brands. Shop owners can expect to make a profit of 20% on their sales, incentivizing investment in the state’s alcohol market.
Increased Investment in Andhra’s Liquor Industry
The policy is expected to attract significant investment into the state’s liquor industry, especially in the beer sector. The All India Brewers’ Association anticipates renewed interest from investors, given that each brewery requires an investment of ₹300 crore to ₹500 crore. The stable and predictable nature of the two-year policy period is expected to boost confidence among retailers and investors, bringing fresh capital into the state’s economy.
Policy Designed to Curb Illicit Alcohol Use
One of the government’s major goals with this new policy is to reduce the prevalence of illicit alcohol. The lower price point of ₹99 or less is expected to cut into the demand for illegal alcohol, which is often consumed by low-income individuals unable to afford more expensive legal spirits. By providing affordable, legal alternatives, the Andhra Pradesh government aims to reduce alcohol-related health risks and bring more consumers into the formal market.
Market Gains for Larger Players
The shift to privatization could also result in significant market share gains for larger liquor companies. Analysts predict that the new policy will allow big national and multinational players to expand their presence in Andhra Pradesh. With the market opening up after years of decline, many companies are expected to launch new products and ramp up distribution efforts in the state.
The Andhra Pradesh government’s new liquor policy is a comprehensive effort to boost revenue, stabilize the market, and curb illicit alcohol use. By opening the market to private retailers and offering affordable options, the state hopes to reverse declining sales and attract fresh investment. With an anticipated annual revenue of ₹5,500 crore, the policy has the potential to revitalize the state’s liquor industry while providing consumers with safer and more affordable choices.
