Lucknow, October 31, 2023 Uttar Pradesh is riding high on success, and its spirits are soaring. In the fiscal year 2023, the state recorded an astonishing excise revenue of Rs 42,250 crore, marking a remarkable threefold increase from the Rs 14,000 crore reported in 2017-18—the year that marked the ascent of the BJP and Chief Minister Yogi Adityanath to power.

UP Surpasses Karnataka in Liquor Revenue

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Uttar Pradesh’s remarkable achievement places it ahead of Karnataka in the realm of liquor revenue, solidifying its position as the number one contributor in this sector. However, unlike Karnataka, Uttar Pradesh lacks a city akin to Bengaluru—an IT hub and home to a high-earning, nightlife-loving population.

Senthil Pandiyan, Excise Commissioner, shared, “Karnataka is now a distant second. Our policy has shifted the industry from a license fee-based system to a consumption-based one to break the monopoly. We have also restricted the number of shops to two per person and adopted the e-lottery system. Technology has been employed to establish track and trace systems.”

Amendment in Excise Policy Creates Opportunities

The UP government’s amendments to the excise policy have shattered the monopoly held by major players, paving the way for small businesses to enter the liquor sector. The state’s excise department reported an impressive revenue growth of 16 percent in the first six months of the previous fiscal year.

This surge is attributed to increased liquor demand and robust enforcement against illicit liquor and smuggling activities from neighboring states. Unlike the controversial excise policy in Delhi during 2022-23, where licenses were granted through open bidding, Uttar Pradesh employs the e-lottery system, allowing smaller players to enter the industry.

Growth Beyond the Capital

Uttar Pradesh’s revenue collection has been significant, with Lucknow leading the charge. However, Noida, Ghaziabad, Meerut, Kanpur, Varanasi, Prayagraj, Gorakhpur, and Bareilly have also made substantial contributions. Even smaller districts like Kushinagar, Shahjahanpur, Sonbhadra, Deoria, Lakhimpur Kheri, Hardoi, and Chitrakoot have reported higher revenue.

Changing Landscape of the Liquor Business

The liquor business in Uttar Pradesh has undergone a transformation. Liquor shops are no longer dingy, poorly lit kiosks with intimidating wire mesh. Instead, they have been replaced by swanky stores in high-end shopping malls. These stores offer a diverse range of brands, and their inviting decor has attracted women and girls to confidently walk in and purchase their preferred beverages.

Senthil C. Pandian remarked, “We have ensured an increase in government revenue. We have identified districts where sales have been low and are investigating the reasons behind the drop.”

Rising Popularity of Foreign Brands

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Liquor consumers in Uttar Pradesh are increasingly embracing foreign brands. The number of registered liquor brands in the state has reached 3,854 during this fiscal year, marking a record high. This surpasses the previous fiscal year, where 3,106 different alcoholic products were registered.

Uttar Pradesh is witnessing a surge in imported foreign liquor brands, including whiskey, vodka, rum, and gin, with their numbers growing from 199 in the previous fiscal year to 573 in the current year. Non-Indian wine producers have also expanded their offerings, while foreign beer manufacturers have increased their product range.

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A Supportive Government and a Flexible Policy

Uttar Pradesh’s excise department has received significant support from the state government to implement measures that enhance the ease of doing business. This support, along with a robust and flexible annual excise policy, has led to increased brand registrations, resulting in year-over-year revenue growth from Rs 18.12 crore to Rs 20.92 crore.

The department eliminated the requirement for foreign brands to submit an authority letter from the principal importer, making it easier for overseas companies to enter the market.

Challenges for Beer Manufacturers

The rise of hard liquor brands has posed challenges for beer manufacturers. Duty increases on beer earlier this year, along with technical issues on the excise portal, led to a decline in the beer industry volume during the summer months, nudging consumers toward high alcohol strength beverages.

Uttar Pradesh’s impressive excise revenue growth is indicative of a changing liquor landscape in India. The state’s policies and economic shifts have made it a leader in the sector, with diverse options, inviting liquor stores, and increased demand for foreign brands. As the state’s liquor market continues to evolve, it remains a compelling example of adaptation and growth in this dynamic industry.