Chief Executive, Tulleeho

Imagine the next time you walk into a liquor shop, instead of being confronted with surly staff, metal grills, dirty interiors and limited brands, you’re in, for want of a better word, the Benetton equivalent of liquor retail. That’s no longer a myth, as many of you know, the change is already happening in many parts of India. Those of you living in Bangalore have always experienced the pleasure of shopping at Spencer’s on MG Road or at Wine Palace in Bangalore Central.

What’s coming together across the country from a trend perspective is the following:

Reliance, Spencer’s, HyperCity, Food Bazaar, Foodland Express—the names don’t stop—they’re all moving to liquor retailing. This movement, along with the entry and expansion of organised retail, has brought about legislative changes across the country. The Karnataka government has for the longest time, permitted department stores to retail all categories of liquor—beer, wines and spirits—what in trade jargon is called the full spectrum licence.

Other state governments have, over the past year, been loosening the shackles. Delhi allows

Hic, hic hurray! A customer looks at a bottle of wine at a liquor retailing store in Fabmall, Bangalore

department stores to retail beer and RTDs (ready-to-drink, like Bacardi Breezers), which is why so many petrol pumps are being favoured as pit stops due to their "In&Out" convenience stores. The Maharashtra government recently allowed wine retail and so has Haryana. Chandigarh has had full spectrum for a while, with Empire Stores being one of the nicer places to buy liquor in India. Reliance Fresh will also be retailing liquor in select outlets, Food Bazaar already has a wine counter (manned by Sula Wines) in their Phoenix Mills branch in Mumbai, and when I last visited the Raheja-owned HyperCity in Mumbai, they were about to open their wine section.

The rise of organised retail has potential pros and cons for the liquor industry. Knowing the scale of Mukesh Ambani’s ambitions, one sees him extending his supply chain into setting up/acquiring his own production sources. Alcohol is probably a by-product, which could be made in one of his giant petrochemical complexes in any case!

On the positive side for the liquor industry, consumers now have a far better retail environment to shop in and there is potentially an increase in the retail consumer base as women now can go wandering into the liquor retail section, without the fear of being ogled or ridiculed. Sales promotions can also become more interesting, with sampling a possibility in certain markets as well as bundling of food/snack items, which could help create a wine and food-pairing trend.

Along with partnering with supermarkets, the drinks companies have also turned their attention to the small shops. That’s where the bulk of liquor is transacted. Two major companies—Diageo and United Spirits (USL)—have begun staking out this next frontier.

Diageo has opened Johnnie Walker Select, a concept that involves their paying for the full or part

In The Right Spirit • Karnataka government has for the longest time, permitted department stores to retail all categories of liquor. • Delhi allows department stores to retail beer and RTDs. • The Maharashtra government recently allowed wine retail has Haryana.

remodelling of retail shops, in exchange for major branding opportunities in the shop. The shop itself is a multi-brand shop, but Diageo brands dominate. United Spirits has also got into the act, with a retail outlet opened in Gurgaon, with the same model as Diageo’s. An existing outlet has been remodelled, with no expenses spared to further USL’s branding requirements with LCD screens playing messages from USL management, certificates won by USL brands behind the cash counter and life size images of Shilpa Shetty plugging Romanov. This is the first outlet in USL’s retail modernisation initiative, with what Diageo and United Spirits is doing, threatening to change the rules of the game and take them forward ahead of the competition. Expect the others to start playing catch up.

The recent decision by the Centre to have a flat slab of 150% customs duties and eliminate all additional duties has the potential of being extremely beneficial. I say, "the potential," because the states still have the option of bumping up duties, which may neutralise the central reduction. Party pooper Maharashtra has done that but, thankfully, it looks like all states are not blindly following its lead. Expect a 15 to 20% reduction in retail prices of most imported brands, fuelling the retail ride.

The modernisation of retail has also led to changes in store layout, with many more stores opening up, and consumers free to walk around and grab the labels. With all these changes, the drinks companies will now have to spend more on visual merchandising. There will now have to be an extra impetus either by the storeowner or the drinks company towards training the retail staff. It would be useless to spend a few lakhs in remodelling a store, if a few thousand can’t be spent in hiring a better quality staff or in training the existing ones in basic conversational English as well as in basic information about different categories. If you can’t train them, then automate... I expect to see interactive kiosks at major retail shops, which will educate as well as offer promotions on brands. All things considered, if you’re a consumer, retailer or drinks company, things have just got a whole lot more exciting. Makeover Time!