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Bangladesh booze makers toast new liquor laws
Teetotaling Islamic groups push back against updated rules
Carew's distillery west of the capital Dhaka makes spirits distributed through sales centers in three major cities. © Afzalul Haque Badol
SYFUL ISLAM, Contributing writerMay 5, 2022 15:20 JST
DHAKA -- Bangladesh's liquor producers are toasting a once-in-a-century overhaul of strict alcohol laws that they hope will pop the cork on sales in one of the world's least boozy countries.
State-run Carew & Co (Bangladesh) is gearing up for a jump in alcohol demand after the changes in February cleared the way for more bars and restaurants to legally sell drinks in the Muslim-majority nation.
"We are ready to supply as much as needed," Carew Managing Director Mohammad Mosharraf Hossain told Nikkei Asia, adding that the company's main distillery was operating at just 50% capacity, without elaborating. "So we're hopeful that our sales will go up significantly."
Bangladesh's liquor laws were last updated more than 100 years ago and sales are tightly regulated. The few restaurants and bars that sell spirits keep a low profile.
Nearly 90% of the country's 163 million people are Muslims who generally abstain from liquor consumption for religious reasons. Bangladeshi Muslims can only legally drink if they have a license backed by a doctor who recommended it for health purposes.
Per capita alcohol consumption in Bangladesh comes in at about 0.02 liters annually, compared with 9.7 liters in heavier-drinking South Korea, according to World Bank data.
The complicated new rules don't mean that anyone can drink whenever, or wherever, they want.
But advocates say that Bangladesh's modernized regulations replace a vague and poorly enforced regime, paving the way to make it easier to legally serve alcohol and for more new bars to set up shop.
The changes come as the country welcomes a growing number of foreigners working on major infrastructure projects and moves to bolster its tourism sector, while rising local incomes could also help spur demand.
"If getting a license is made easier and people have money in hand, liquor sales will increase," said Sekandar Ali, manager at the Nightingale Restaurant's bar, one of the few licensed watering holes in the capital Dhaka.
Bangladesh's government is keen to crack down on the illegal alcohol trade -- and push up its paltry liquor tax revenue. The underground trade in liquor could be worth as much as $190 million annually, so Bangladesh is losing millions in potential tax revenue, according to a 2020 study published in the Journal of Economics, Management and Trade.
Among the new rules, liquor retailers can now import 40% of their stock while the remaining 60% must be sourced from the country's two licensed producers, including Carew. There were no specified quotas in the past.
The changes have helped Carew, which traces its roots to a 19th century British businessman who set up the distillery, to win approval for two new sales centers in a pair of tourist hubs that boast long stretches of white-sand beach and panoramic sea views.
The distiller, which has sales centers in three major cities, produces a variety of liquor, from whiskey and gin to brandy and rum, at its underused factory about 250 km west of Dhaka. It declined to give annual production figures.
Carew is also seeking permission to set up two more sites to make rectified spirits, made by repeatedly distilling pure ethanol, and also hike beer production to meet rising demand among younger Bangladeshis.
Carew's Hossain said some foreign producers have expressed interest in a beer joint venture, but talks were delayed by the pandemic. He declined to name the interested parties.
While over 85,000 Muslims in Bangladesh have a license to drink -- and there are more who imbibe illegally -- much of the demand has been driven by non-Muslims and foreigners, including diplomatic personnel who can buy liquor through licensed warehouses, although import duties can reach a hefty 600%.
Authorities have cracked down on sites earmarked for diplomats in recent years as more and more bottles disappeared into the black market, while COVID-19 disruptions curtailed the flow of illegal liquor into the country.
That boosted appetite for Carew's locally made spirits. The state-backed liquor maker's net profit in its 2020-2021 fiscal year was $12.06 million on revenue of $32.47 million, well up from net income of $6.56 million on revenue of $23.53 million in the 2016-2017 financial year.
"Whenever the revenue board raises vigilance on diplomatic warehouses, their illegal sales stop and Carew's revenue goes up," said a company executive who asked not to be named as he was not authorized to speak with media.
But not everyone is happy about Bangladesh overhauling its strict alcohol laws, including some of the country's Islamic political parties.
"Islam forbids drinking alcohol so the government should follow that," said Mufti Syed Muhammad Fazlul Karim, senior Emir of the Islami Andolon Bangladesh party.
Cultural norms haven't stopped Bangladesh's sole beer producer, conglomerate Jamuna Group, from moving to hike stocks of the country's only locally made brew, Hunter, and revive shelved plans to move into liquor production.
"Since the number of sales points will increase under the new rules, we expect good business growth," said Jamuna's commercial director ABM Shamsul Hassan.
Bangladesh booze makers toast new liquor laws
Teetotaling Islamic groups push back against updated rules
asia.nikkei.com
