SupplyCo - Bevco merger back on table; expert panel to study liquor sales plan

THIRUVANANTHAPURAM: The Kerala government is considering a major proposal to permit the state-run Civil Supplies Corporation, popularly known as Supplyco, to retail liquor through its extensive network. The move, originally recommended in a government white paper, aims to leverage lucrative liquor profits to mitigate the severe financial deficits Supplyco faces due to its market intervention operations and essential commodity subsidies.

The Department of Food and Civil Supplies has officially decided to constitute an expert committee to evaluate the feasibility of implementing this plan with necessary modifications. This panel will be formalised following high-level consultations with the state’s Finance and Law departments. According to the white paper, the government is weighing a strategic merger between Supplyco and the Kerala State Beverages Corporation, which holds a monopoly over liquor distribution in the state. Under the proposed framework, both public sector undertakings would be integrated but maintained as two distinct functional divisions so that liquor revenues can directly cross-subsidise consumer goods.

Currently, Supplyco suffers an annual deficit exceeding ₹200 crore due to its market intervention initiatives meant to curb inflation and keep daily essentials affordable for the public. The government calculates that if liquor revenues can successfully bridge this fiscal gap, it will enable the state to offer higher subsidies and more effectively check price rises in the open market.

A similar proposal was previously deliberated during the Left Democratic Front administration, when the Food and Public Distribution Department suggested launching a designated number of premium liquor outlets under Supplyco across all districts. However, that initiative was ultimately shelved following strong bureaucratic opposition from both the Excise Department and the Beverages Corporation.

The plan was dropped at the time after an internal assessment revealed that Supplyco could only generate substantial profits if it procured liquor directly from manufacturing companies. Retailing stock sourced through the existing Beverages Corporation network would offer very low profit commissions, failing to resolve Supplyco's financial troubles. Following the collapse of that plan, the government decided to expand Supplyco-run petroleum outlets instead. However, Supplyco has recently informed the government that petroleum retail operations are vastly insufficient to offset its mounting financial losses, bringing the liquor retail alternative back into serious focus.