News: In price war with Delhi, Gurugram vends sell liquor at wholesale rates-09-03-2022
Liquor vends in Gurugram have put up hoardings listing the wholesale prices of liquor to attract customers, following which complaints were made to excise officials.
A week after the Delhi government prohibited discounts or rebate on the MRP (maximum retail price) of liquor in the national capital, stating that such discounts were promoting “bad market practices” among licensees, retail liquor vends in Gurugram have started selling their stock at wholesale rates, in what appears to be a “price war” with Delhi, according to people involved in the industry.
Liquor vends in Gurugram have put up hoardings listing the wholesale prices of liquor to attract customers, following which complaints were made to excise officials. On Tuesday, the department issued directions to take strict action against those mentioning their shops as “L1 (the term used for a wholesale licence)”.
VK Beniwal, deputy excise and taxation commissioner (east), said they have written to all licensees not to display hoardings outside shops, else strict action will be taken against them.
“We removed around 200 hoardings from across the city on Monday and Tuesday where the shopkeepers were offering liquor at wholesale rates. There are only four wholesalers in east zone and five in west zone,” he clarified.
This comes a week after Delhi, on February 28, prohibited all discounts and offers on the retail sale of liquor in the national capital. The Delhi excise department said the decision was taken in view of instances of overcrowding in and around shops, which were causing law and order problems and also because licensees were resorting to “unhealthy market practices” by offering discounts of up to 60% on the MRP.
Industry sources said the latest price war in the National Capital Region (NCR) started after Delhi implemented a new excise policy on November 16, 2021. Liquor retailers in Delhi were, for the first time, allowed to sell bottles at a discount, or with offers. Until then, liquor could only be sold at the price prescribed by the state excise department. The old regime had pushed customers to Gurugram, where discounts are par for the course, and it was to stop this business drain that Delhi had introduced competitive pricing in its new excise policy.
But when Delhi retailers started offering heavy discounts, the trend reversed. People from Gurugram, Noida and Faridabad, among other NCR cities, made a beeline to Delhi to pick up bottles at cheap rates. As a result, queues wound for several metres and storefronts were packed to the gills with people as stocks flew off the racks.
So much so that Delhi sold 24.5 million litres of liquor in February this year — almost double the average monthly sale of 13.2 million litres in 2019-20.
All that changed on February 28, when the Delhi excise commissioner issued an order discontinuing any discount or rebate on the MRP of liquor, saying such pricing will distort market forces, create monopoly and promote alcoholism.
“Now, we are selling liquor only at the MRP set by the Delhi government. It has been a week since the order and we have already started feeling the pinch. Our sales have dipped, resulting in losses amounting to crores of rupees on a daily basis. Customers are again buying from Gurugram, as was the case during the old regime, as they are getting good offers there,” said a top official at one of the biggest liquor retailers in Delhi.
“The Delhi government mopped up at least ₹9,000 crore from us upfront and is now resorting to knee-jerk decisions. We did nothing wrong by offering discounts. We followed the Delhi excise policy in toto,” the official said.
Several retail licensees approached the high court seeking a stay on the February 28 order, but on Tuesday, the court dismissed the petitions and declined to stay the government order.
In Gurugram, meanwhile, liquor vend owners said they started giving out the discounts emulating Delhi.
Krishna Kumar, manager at a vend in Sector 40, said they are keeping regular tabs on Delhi prices to remain in the game. “We are sending our salesman at least twice a week to get a list of prices and discounts being offered in different Delhi shops. When customers ask us for a discount, we are able to ensure that we offer them the cheapest rate. Our aim is to not lose customers to Delhi,” he said.
Gurugram store owners also said they recovered losses incurred during the Covid-19 lockdowns in just two months, when Delhi shops were closed till November 16, owing to the transition to the new excise regime. Later, liquor prices in Gurugram again went down by 30% as soon as Delhi shops opened and started offering discounts.
