Highway Liquor Ban Negatively Affects Sales Of Related Goods

Every Economics student undoubtedly will have heard about complementary goods. These are products whose demand is interrelated. For example, toothpaste and toothbrushes. However, thanks to the Supreme Court’s highway liquor ban, we’re able to see just how complementary these goods are.

We all enjoy a good peanut masala after a few drinks or a few munchies. So it’s no wonder that the sales of items such as soda, packaged water, juices, packaged chips, peanuts, fries, namkeens and starters have dipped 10-30 percent since April 1. That dreaded day when the court order that disallowed all sales of liquor within 500 meters around all highways across the country came into effect.

Vikram Agarwal, promoter of Greendot Health Foods, maker of Cornitos nachos said that the ban has affected packaged snacks as there is a there is a direct correlation to the consumption of alcohol along highways. He estimated a decrease in sales of about 10 percent post the ban.

AD Singh, managing director at fine-dining eateries Olive Bistro and Soda Bottle Openerwala, said business is down by 30-50% for four of its restaurants situated in Gurgaon and Mumbai. He mentioned that not only had the average size of the bill has come down by 30-40 per cent due to the liquor ban but also there was a lack of demand for dishes that go along with it.

Rahul Singh, promoter of The Beer Cafe, said that around Rs.20 crore of their business is affected just because the consumption of mixers such as packaged juice, carbonated drinks and packaged water along with packaged savory products has stopped completely following the ban.

Within the organized sector, the affected packaged snack makers include PepsiCo, Parle, Cornitos, Haldiram’s, besides which there are scores of smaller or regional players. The overall revenue losses from the food and beverage industry due to the ban are estimated at Rs. 65,000 crore and one million jobs. That’s no trifling matter. The liquor ban was put into place in order to rectify the issue of drunk driving, but only time will tell if the ramifications of the ban will outweigh its benefits.