NEW DELHI: Diageo’s alcohol-delivery ambitions in India have hit a roadblock with the UK-based liquor company exiting from its investment in Chennai-based startup HipBar at around a 98% loss.
While the move comes at a time when several Indian states are putting in place norms to allow home delivery of alcohol, Diageo which invested Rs 27 crore in HipBar through its domestic entity USL for a 26% stake in 2018, is selling back the entire stake to the startup’s promoter Prasanna Natarajan for Rs 52 lakh.
Industry insiders attributed Diageo’s hasty retreat to regulatory hurdles and a strong pushback from local liquor retailers that are against online aggregators.
When contacted, a Diageo spokesperson said, “While home delivery has opened up in several states since 2020; as is the case in every sector where e-commerce has grown to >1% in India, it will take some years to mature as a model. In addition, the alcobev model is likely to develop quite differently in India to regular e-commerce due to the nature of regulation of this industry.”
India’s spirits market, pegged at around $27 billion by IWSR Drinks Market Analysis, has recently witnessed e-commerce majors, including Amazon, Flipkart and Swiggy as well as independent platforms such as Tiplur, contemplating making bold inroads into online delivery of alcohol, especially as the Covid-19 pandemic has kept consumers away from markets and shops.
“Post investment, the business faced some push back from some pockets of the trade and the state excise department of Karnataka and this matter is still sub-judice,” HipBar founder Prasanna Natarajan told TOI, as per their reports.
“HipBar, being an early and solo mover, had to face many regulatory hurdles and challenges to open up home delivery, which it eventually did with states of West Bengal and Odisha. Post Covid, the market dynamics have changed and the more established players are also entering this niche space.”
The above news was originally posted on timesofindia.indiatimes.com