The past few years have seen accelerated digitization across industries in India, and FMCG has been no exception. From automation in manufacturing, to supply chain management, from digital wholesale to B2C purchases, there has been an indelible footprint of digital technology across the FMCG landscape.

For various reasons, the same cannot be said about the alcoholic beverage (or alcobev for short) segment at present. While there has been slow but sure digitization in parts, alcobev has a fair bit of catching up to do.

Context of Digitization in the Beverage Industry

A key differentiator for this segment viz. others, is that alcobev is essentially a state subject. The value chain is heavily influenced by the prevailing regulations in each individual state, right from licensing all the way down to consumer policy. As most brands tend to be national at most, if not Global, this means a one size fits all approach to digitization does not work.

Additionally, alcobev is mandated to follow a three-tier structure, clearly defining the roles of the Manufacturer (or importer), the Wholesaler (Corporation or Depot or Private) and the Licensed Retailer. The industry is also subject to significant legacy style of operations, and frequently in retail, the owner and operator (employee) may be different, which presents unique challenges to digital endeavors.

Present efforts towards Digitization

Global brands have been actively evolving the manufacturing landscape for their products in India, with powerful tools helping in production planning, process optimization, MIS generation, data analytics among others. Indigenous brands are not far behind, and have been as aggressive at pursuing such efforts to leverage technology to maximize yields and operational efficiency.

Individual states have taken significant steps to digitize the value chain, including, but not limited to digital auctions & licensing, track, and trace of alcobev shipments, online order management (B2B) and digital billing at retail counters. Karnataka for instance, releases a comprehensive data report to all brands, outlining day wise retail wise and produce-wise retail data. West Bengal has mandated scanning of products at the time of sale. Others, like Chandigarh, have recently made digital billing mandatory.

The two legs where digitization is yet to create significant impact, are Retailers and Consumers. After surveying retailers across large and small towns, it has been observed that outside of select medium or large-scale outlets in major cities, most retailers do not even have access to a computer or a tablet at the point of sale. Information is captured manually in registers and reporting too is frequently in hard copies. Inventory management and replenishment is manually driven by seasoned employees or prevailing schemes. This presents a significant opportunity to empower Licensed Retailers with the same digital armory as their other retail counterparts.

Consumers do not have digital access to product availability, information, pricing, and other details in alcobev today. The information is typically available to them either via word of mouth, visit to their nearest retailer or via access to non-standardized and non-verified third-party websites and mobile applications. Consumers are often susceptible to payment scams as well while using unknown or untested applications on the web. Online purchase channels are also not available to consumers today typically, via regulations that are pertinent to safeguard the consumers against counterfeit products and to prevent underage consumption. States are still evaluating solutions, with digital and physical controls, and here too a quantum jump in digitization is just around the corner.

Benefits to be unlocked for the Beverage Value Chain

Digitization of the alcobev value chain is likely to bring in more transparency and better tracking of goods, which will help the Regulators in the long run especially as the scale & revenue continues to rise. This, coupled with robust system driven controls, can make for a potent combination for the industry to evolve.

Geo-locking may be one such example, where the movement of alcobev products can be both monitored and regulated. Luckily technology can help us manage this at current and shall continue to do so at expected scale.

With consumer centric digitization, Consumers can conveniently discover new products, and where feasible, purchase their products from Licensed retailers and have it delivered to them safely and with the same convenience as their groceries or medicines.

There is a wonderful opportunity to use technology for consumer education, on the right way to sip responsibly, learn more about their products to make informed decisions, and potentially to make the subject information driven rather than social taboos. Social aspects of consumptions can also be tapped into with solutions like reviews, wish lists, blogs and more. As the Consumer is educated on alternatives, such as 0% alcohol products etc., it also presents credible alternatives for Consumers who choose to not consume alcohol.

Trade and retail can potentially enhance operational as well as financial efficiency, leaning on analytics and insights for making key decisions about their business in a relatively low margin business. With more significant solutions gradually made available to them, particularly leveraging artificial intelligence and big data, there is also an opportunity to have more nuanced market insights and MIS available for their consumption.

Lastly, due to the responsibility with the brands to neither promote alcohol products nor its consumption, they have limited ways to reach interested age verified consumers. Working with the Regulators and Digital enablers, they can potentially access the right audience, know their consumers better, and be able to serve them better.

The power of Digital

The beverage industry is too large and too complex to not leverage the digital solutions available to them today. Alcobev products are FMCG too, and it is time they get the perks of that!