Thursday, March 20, 2014

Liquor Policy in Kerala

"Midway this way of life,
I woke up to find myself in a dark wood,
Where the right road was wholly lost and gone."

Dante "The Divine Comedy"

The liquor policy of the state of Kerala is ambiguous. We have access to information in the public domain that our exchequer is benefitting much from the sale of liquor. But the brands which sell more are also those that does not make sense drinking in tropical climates like ours. But of  course one need not make sense of everything he/she sees. However, it is important to raise the question of transparency. Firstly, the logic of higher taxes on liquor has not reduced its consumption as is obvious from the data. If we are bound by the spirits of Article 47 in our constitutions why not ban the sale completely. It seems that the state is bound between two extremes: the need to support a revenue base and promote a jittery consumer sovereignty by providing a difficult access to a product.

Lets just get back to the question of transparency. As we go through the manufacturing units, save for a few none of them has major webpages that give details of the process or contents in their manufactured liquor. So what do we know about the most preferred "Jai Jawan" brand of brandy other than the fact that it is extremely hard for the first timer or that it is highly demanded by the regulars. On an average between the regulars and the first timers, for the midway consumer such brands are consumed needlessly for is affordability. The cost of this affordability however should be a major concern.

Are the consumers limited of options? Consider this hypothetical situation. If a consumer is given an option to choose between a low priced brandy manufactured in some low profile unit in the state and an imported brand with a Bottled at Origin tag highly visible in the foreign market, what would he choose? The answer is not so obvious. But as I mentioned someone between the first timer and the regular, less under constraints between enjoying the first sip and the regular dose would surely want to try something new. But his options are limited.....in Kerala. Or is it? Need not be: There are high profile bars, secret joints in the hides of Fort Kochi or in household itself where foreign branded liquor is available. But there is a true asymmetry in information. The midway consumer is bereft of such access. These are theoretical secrets (mind it) and practically I would just gasp in strange anxiety if someone were to ask me about the whereabouts of these places.

Now accessibility of foreign liquor is also restricted by discriminatory prices. As I enquired in one of the luxury bars in Kerala, a bottle of Jonnie Walker (Black) could be priced almost six times above its retail price. Taxes are of course used to justify this, but still someone needs to decipher its transparency. Why do a consumer have to go through all this turmoil to access his preferences? Why are states dealing with extremist policies in restricting access which makes the honey sweeter?

                                         A premium outlet in Delhi's Ansal Plaza

Last week I visited Delhi and was roaming around in Ansal Plaza (south Delhi). I came across retail liquor outlets selling branded liquor at the actual retail prices (not sure about the components of this price). I asked for the price list but was not given one. However, I spend considerable time looking at these bottles. And there were obvious ways in which various income levels are targeted. You get different quantities in different volumes. There are sample small bottles, medium ones as well as large ones in which these products are sold. So at the price of a "Jai Jawan", you can indeed try a branded version in limited quantities. This might be experimental but why not bring the same to Kerala. Who is afraid of promoting competition with the local low profile distilleries? What is preventing us from experimenting with understanding the actual choice of the Malayalee between foreign and local brands? Or is there more than what eyes can meet, Is the government policy of protectionism allowing the growth of domestic monopolies. If that is the case then there is word of caution (which one of our professors used to repeat time and again) that rings in my ears: monopoly is a bad, it leads to dead weight losses!  

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