The production of country liquor in Maharashtra’s sugar mill bottling units has skyrocketed, increasing by 234.71% in the 2023-24 financial year compared to the previous year. According to the annual performance audit by the Vasantdada Sugar Institute (VSI), mills produced 1,34,800 lakh cases of country liquor in 2023-24, a massive jump from 40,275 lakh cases in 2022-23.
What’s Driving the Surge?
- Higher Demand & Premium Pricing: The demand for country liquor (desi daru) has risen significantly, leading to better prices for producers.
- Ethanol Production Ban: The decline in ethanol production, following restrictions on producing ethanol from sugarcane juice and B heavy molasses, led to a shift toward rectified spirit and extra neutral alcohol (ENA), key ingredients in liquor manufacturing.
- Election Year Effect: Traditionally, demand for alcohol spikes during elections, contributing to increased production.
Shift in Alcohol Production Trends
The VSI report analyzed 98 sugar mills, but only six have bottling units for country liquor. While rectified spirit is used for country liquor, ENA (which also contains 96% alcohol) is used to make Indian Made Foreign Liquor (IMFL).
The report also noted a shift in overall alcohol production:
- Total spirit production rose by 3.29%, from 10,614.59 lakh litres in 2022-23 to 10,963.35 lakh litres in 2023-24.
- Capacity utilization, however, dropped from 88.09% to 63.69% due to restrictions on ethanol production from certain sugar byproducts.
Market Forces at Play
Sanjay Khatal, Managing Director of the Maharashtra State Cooperative Sugar Factories Federation, explained that sugar mills responded to market dynamics. Higher liquor prices encouraged mills to keep their units operational, rather than letting them sit idle.
Additionally, the central government’s ethanol production restrictions led to increased prices for rectified spirit (RS) and ENA, especially after the sugarcane crushing season ended.
Looking Ahead
With growing demand, shifting regulations, and evolving market trends, Maharashtra’s sugar mills are adapting their production strategies. The rise in country liquor output highlights how changes in ethanol policies can have ripple effects on the broader alcohol industry.
