Decline of beer sales impacts tourism in AP?

Tourist destinations are important landmarks for any state to showcase their culture and attract tourists every year. An important source of revenue for any state, it holds the same pertinence for Andhra Pradesh as well.

Specific state decisions made by the government effects certain sectors that include; general public, revenue and companies operating and selling their products in AP.

On October 1, Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy implemented the new liquor policy to be executed in a phased manner - ban liquor in the state.

This ban adversely affects the income that the state generates from the sale of beer and IMFL every year. Now the ban on liquor is creating an impact on the number of tourists visiting the state.

Based on the first month's report around liquor consumption in the state, it has been revealed that the beer sales in the state have fallen drastically by half due to non-availability of chiller at liquor retail outlets and also due to implementation of "No Permit Room" rule.

Chillers play an important role especially keeping the beer chilled which is the right way of consumption as well. Whereas No Permit Room policy leads to public menace and bootlegging.

The reasons for decline in beer sales

While the state of Andhra Pradesh is selling approximately three crore cases of beer every year, the sales have declined since the new excise policy has come into effect.

Due to the closure of permit rooms, customers or consumers find it easy to pick up the nip or the 90ml or 180ml version of the hard liquor and are consuming it, which effects their health.

Specific information has already surfaced in the media that beer sales have fallen by 50 per cent in the past month.

The business experts are also predicting that the beer sales to decline further in the next two months. The source of information revealed that one of the big drivers for this is the closure of the permit rooms and the other driver is the removal of chillers.

While the government permits companies to set up chillers, some companies are hesitant to set up retailers as the purchase of beer is reduced due to the elimination of permit rooms.

This would mean that companies that can supply will have very clear benefits in terms of sales but that benefit may or may not convert in to a commercial gain given how the AP government has not settled its dues in a long time.

As a result of this, out of 15 distilleries, 6 are stopping the supply by the end of this month and there will definitely be a certain impact on the demand and supply of beer/alcohol.

How the decline of beer sales have impacted tourist spaces in AP

In AP there are about 10 major tourist spots of which 5 are really big. The biggest one happens to be Tirupati. With the exception of the holy shrines, there are about nine major tourist destinations in the state of Andhra Pradesh, while the state's reputation rests on the horizon.

One may ask how tourism has affected the decline in beer sales. The Chief Minister has already made it clear that he does not see the people's weakness in connection with consumption of liquor as a business trend or as an income source for the government.

This is why his first step of complete ban on liquor consumption is implemented even though the state government faces huge losses from one of the vital income source.

With this alcohol consumption being an active contributor to the state's revenue, we expect total prohibition to have an adverse impact on the overall revenue.

For 2019-20, the state had set a target of Rs 7,358 crore excise duty, which is levied on sale of alcohol. The revenue from excise duty was Rs 5,789 crore in the previous year.

In this context, we should appreciate that the commitment of CM irrespective of profit or loss on implementation of his promise for the benefit of the society.

However, the policy of No Permit Room is indirectly affecting the people/society. It is believed that the "removal of permit rooms" currently being implemented in AP's new liquor policy will have a negative impact on the income of tourist destinations, where beer sales are high.

Without permit rooms, public drinking will be encouraged.

The necessary changes in present liquor policy can be done by rethinking on the "No Permit Room" policy and allowing the retail outlets to keep chillers to provide fresh stock of beer.

It will be challenging for the government to earn the targeted revenue from excise tax while tourism is now facing negative impact due to declining of beer sales and the effect of "No permit room" policy.

The aim of the Government should be appreciated, but the implementation of present liquor policy, which affects important revenue sources, should also be revised with necessary changes.