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Two By Two Fri, 21 Feb 25 |
An abridged, narrative version of the latest episode of Two by Two, The Ken’s premium weekly business podcast. |
What is stopping 10-minute alcohol delivery?. It's the next big frontier in quick commerce, but regulatory and political challenges abound
| 5 min read |
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There was a time last year when quick-commerce companies were adding new categories into their fold almost every month. Sometimes, it wasn’t even a category, just a product or product line they had onboarded onto their platform. Think Playstation 5, Decathlon products, or Lego sets.
My first thoughts almost always were—“Meh, just marketing stunts. Bet they won’t be selling those for long” or “Who’s even asking for this? Do we really need these things on such short notice?” But guess what? Pretty much every single one of those things is still being sold on those platforms, and I have to assume there are people paying to get them delivered in minutes.
So, from the moment we started discussing the subject of our latest episode—a category that both quick-commerce platforms and a substantial number of customers want, but hasn’t quite managed to take off—I was honestly intrigued.
Alcohol delivery.
The state of West Bengal already allows online delivery of alcohol, and a few others were considering pilot projects last year. But I’m sure the fact that such a prized category remains elusive in most states is quite telling on its own. Stakeholders and regulations vary widely across states. In many cases, governments are directly involved, with heavy restrictions on alcohol distribution, sales, and promotion.
So it shouldn’t be surprising that once Two by Two hosts Praveen Gopal Krishnan and Rohin Dharmakumar kicked off the latest session with our guests, both of whom have already tried the online delivery model, the conversation very quickly expanded from “delivering alcohol in a few minutes” to all the cogs that need to be greased for alcohol delivery to even be a thing.
Prasanna Natarajan is the founder of Sipping Spirits and Hipbar, India’s first home-delivery liquor startup, later acquired by Cred. Debashish Shyam is the co-founder and director of Ardent Alcobev, with nearly 20 years of experience in alcohol marketing and sales at organisations such as United Spirits and IBTC in Myanmar.
And neither of them had any qualms busting myths around how lucrative the market is, talking about the gatekeepers who stand in the way, and the risks associated with taking the business online.
Listen to Episode 30: What is stopping 10-minute alcohol delivery?
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You can also listen to the 10-minute trailer version to get a sense of just how big the alcohol delivery market is and why it hasn’t gone online till now:
A big opportunity
The size of the market is huge.
Debashish: The entire alcohol market in India is about 40 to 45 billion dollars.
That throughput goes through 90,000 retail outlets, retail and on-trade outlets. Compare that with FMCG—tea, and coffee put together is about US$15 billion.
But it transacts through only 90,000 outlets. 90,000 outlets in alcohol, versus 12 million outlets in FMCG. So you can see the retail power, the lack of accessibility, and so on and so forth. Because of this licensed outlet reach that is available.
Now, if home delivery were to get opened up, imagine what it would do to accessibility.
The sheer scale of this potential market is why the conversation hasn’t died out yet.
But alcohol isn’t a straightforward business. You can’t just set up a shop, get a few licenses approved, and start handing out bottles. And rightfully so, given the nature of the product. Now imagine trying to sell it on the same app where you get your groceries.
What happened in West Bengal?
The state remains the single ray of hope for platforms and companies wishing to crack open this market.
Prasanna: During the peak of Covid, we had a very progressive excise commissioner.
There were systemic changes that were proposed in West Bengal, where the government had already taken over the wholesale trade and they were threatening retailers that they would also take over the retail trade.
There were strong forces that wanted to make West Bengal into a Tamil Nadu kind of model.
So when the government basically went and told them, ‘listen, you have to do home delivery. You have to work with these operators’, it was a Hobson’s Choice for them.
Debashish: Because it was Covid, volume throughput was not happening. And their excise revenues were down to a minuscule.
Prasanna: And the model that the West Bengal government chose was that you have to pick it up from the retailer, and you have to add a margin for your delivery fees or convenience fees, then you can give it to the customer and not take any money from the retailer.
Because the retailer has only a 4.4% margin, they said don’t touch him.
Instead, if you want to keep Rs 200 for delivery, please feel free to do so.
And this stuck.
Covid playing a forcing hand reminds me of Kerala, too, where at the peak of the pandemic, the government introduced an app to make the purchase of alcohol easy. An online queue management and token generator inspired by the Delhi e-token system. Kerala, if you didn’t already know already, has the highest per capita alcohol consumption in India. Though to be clear, this was no alcohol delivery service.
Regular commerce first. Quick commerce can wait
There are so many guardrails on the sale of alcohol that taking it online at scale will require many things to change first. For instance, if you wanted to sell alcohol on a platform like Swiggy or a Zomato, here are just some of the things you’ll need to do.
Debashish: What Hipbar attempted, and what others attempted in West Bengal, was the hybrid model of going to the nearest store, picking up the stocks, and delivering—therefore protecting the retailers’ interests.
I’m still coming to you in your catchment area. When you move to quick commerce, it means opening up dark stores.
You need to change the Excise Act, because there are new storage places. Then, like Prasanna mentioned in the beginning, the transport of liquor requires a transport permit.
If a delivery partner is going to a quick-commerce store and picking up six bottles and delivering, technically, the Excise Act requires a transport permit.
Prasanna: We used to send so many papers, from the origins and the birth certificate to the consignment lease intrastate. It needs to be escorted with the pilot. It is quite complicated.
But I think the problem here, Rohin, is that the basics of our regular commerce, as Debashish put it very rightly, are not yet in place.
This week’s Two by Two covered a far wider range of opportunities, risks, and roadblocks than I’ve explored here, so do make sure to catch the full episode.
As always, you can write with your thoughts and feedback to [email protected].
We’ll be back with another episode next week.
Regards,
Hari Krishna
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Hari works as a producer and researcher on Two by Two and First Principles. He’s from a “little village in Kerala where nothing much happens”, enjoys reading books (although he loves buying them even more), and appreciates films—be it on Netflix or Criterion.
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