Why has Online Alcohol Delivery Taken so Long to Catch On?
We've been ordering shoes, food, and grocery from the internet for a while. Why is alcohol still taboo?
Today’s Legalease is coming to you on a Monday night. But truth be told, the inspiration for it came on Saturday. Why? Because I felt like drinking a beer.
For obvious reasons, I did not want to visit a store. So, I looked online. What I discovered came as a pleasant surprise. Both Swiggy and Zomato had “wine shop” offerings. Alcohol could now be home-delivered through my favourite food apps!
Today’s story explains why it has taken so long for online delivery of alcohol to catch on.
The Age Barrier
Interestingly, the user onboarding process on both apps is very different for the wine shop feature. I needed to complete an Aadhar-based electronic know your customer (called e-KYC) process. This was to prove that I was of legal drinking age.
Different states have different permissible drinking ages (we’ll explain why in a bit). In Delhi, Haryana, and Maharashtra, it’s 25 years. Many states including Assam, Andhra Pradesh, Odisha, and Uttar Pradesh peg it at 21 years. Others like Goa, Karnataka, and Rajasthan permit drinking at 18 years.
It’s a separate issue that underage drinkers can order alcohol through someone else’s account. But this concern exists even with physical purchases. An underage drinker could just ask someone above the legal age to buy alcohol.
The risk of underage drinking is the same regardless of whether the liquor was acquired through online or offline channels. In fact, online delivery has the added benefits of: (a) safety; and, (b) transparency (assuming digital payments).
If online liquor delivery makes so much sense, why isn’t it more common?
Constitutional Interplay
The main reason is the Indian regulatory framework.
The Constitution of India identifies subjects on which (a) the Central government can legislate; (b) state governments can legislate; and (c) both can legislate. These lists (called the Central, State and Concurrent Lists, respectively), form a part of the Seventh Schedule of the Constitution.
Let’s take a few examples.
The railways are a part of the Union List. What this means is that the Central government has exclusive power to makes laws on the railways. On the other hand, education is a part of the Concurrent List. Thus, both the Central and the state governments can frame laws on education.
Alcohol is a part of the State List. This gives each state the power to frame its own laws. While this make sense from a governance perspective, it causes problems for delivery start-ups.
Different State, Different Game
The challenge is that Swiggy, Zomato, and every other player trying to enter the space have to:
(a) obtain specific clearances from each state government;
(b) modify the app to account for state-specific conditions (such as variance in drinking age, permissible limits of purchase); and,
(c) ignore states like Gujarat and Bihar on account of legislative restrictions.
However, this space will be interesting to watch in the coming months.
While many state governments have spoken about framing guidelines to regulate online delivery of alcohol, there isn’t too much in the public domain on this. Given how cash-strapped states are, we think that any guidelines will be favourable since that will generate more revenue.
What is even more exciting is the possibility of states adopting a liberal approach towards alcohol sales in general, in order to boost excise revenue.
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