Over the last few quarters, several markets have been performing strongly, notably Uttar Pradesh, Haryana, West Bengal, Rajasthan, and defence for spirits, beer, and wine makers

Photograph: Francis Mascarenhas/Reuters

Makers of spirits, beer, and wine are working to identify new markets of growth as two of the industry’s biggest liquor markets, Maharashtra and Telangana, remain embroiled in taxation and payment issues.

“Over the last few quarters, several markets have been performing strongly for us, notably Uttar Pradesh, Haryana, West Bengal, Rajasthan, and defence (army canteen sales),” Rajeev Samant, chief executive officer, at Sula Vineyards, told 
Business Standard.

While the company has not seen an impact in Maharashtra, it faced a “temporary disruption” in Telangana earlier this year due to licence expiry and renewals.

Samant added that new markets are likely to grow faster over the medium to long term, as wine consumption expands beyond its traditional strongholds.

The company’s two biggest markets are Maharashtra and Karnataka.

However, new markets are slowly turning into their largest and most strategic regions.

“We see significant headroom for growth in these states, driven by increasing urbanisation, rising disposable incomes, better availability, and a growing acceptance of wine as a lifestyle and social beverage,” Samant further said.

Sula Vineyards growth strategy

The company is focusing on strengthening distribution, expanding the portfolio’s reach, and building consistent consumer engagement in these markets to steadily increase their contribution to overall revenues.

For another major spirits maker, states like Uttar Pradesh, Haryana and Andhra Pradesh have emerged as the next biggest markets, a company official said on the condition of anonymity.

What is Maharashtra Made Liquor

This comes after Maharashtra introduced a new category called “Maharashtra Made Liquor” last year to help boost local investment.

Under the policy, manufacturers based in the region with zero foreign investment can sell products taxed at 270 per cent, while taxes on other premium brands in the affordable segment — those with a production cost below Rs 260 — have been raised to between 300 to 450 per cent.

Meanwhile, in Telangana, mounting unpaid dues of over Rs 4,000 crore have triggered a severe working capital squeeze for companies, threatening industry operations.

“Telangana state is only releasing piecemeal payments to each company. It is a big state in terms of volumes, and payment dues have crossed the 100-day mark as opposed to 45 days, putting pressure on cash flow and thus operations,” said industry sources.

According to estimates, Maharashtra and Telangana contribute about 7 and 9 per cent, respectively, to the country’s liquor industry.