Toddy regulation in Kerala: Need for liberalised policies

Kerala, renowned for its cultural richness and natural beauty, is at the cusp of transformative changes in its liquor policy. As per the Kerala Abkari Act, 1967, "toddy" denotes the liquid derived from coconut, palmyra, date, or any other palm tree, regardless of whether it has undergone fermentation, and falls under the umbrella term of "liquor". Among tourists, it is commonly recognised as "coconut wine." Toddy is a highly regulated product that can be sold only via toddy shops licenced, approved and auctioned by the Excise department in the state. The trees from which toddy is tapped are also marked by the department.

The liquor policy 2023-24 has provisions for the rebranding of Kerala toddy and the expansion of the toddy market to hotels, resorts, etc. rather than confining it to toddy shops alone. The government’s attitude towards the promotion of toddy as a natural beverage can be seen in their submission to the Supreme Court in 2016 in the case of banning liquor shops within 500 metres of national and state highways across the country. On this directive, the Kerala government demanded the exemption of toddy. Interestingly, the state took the stance in the court that toddy is "a very mild alcoholic beverage, full of vitamins and used in traditional dishes." (Sinha,B.2016) Longstanding government intervention in the toddy market has been a problematic approach that has seriously disrupted the market economy (CPPR, 2014).

Efforts to revitalise and regulate the toddy industry are long due from the 1987 A.P. Udayabhanu study that recommended promoting moderation over prohibition. Research also emphasises toddy's tourism potential, aligning with Kerala's broader strategy for rural product development and tourism promotion.

In the present regulatory landscape, the point of sale for toddy is only toddy shops. From 2003-2004 onwards, the auction of toddy shops began with fixed annual rentals determined by the government for each range and group. Before the fiscal year 2001-02, toddy auctions were conducted through oral bidding, lasting around 15-20 days. However, in 2001, online auctions were introduced to modernise the process and reduce physical gatherings, with Auction India.com developing specialised software for this purpose. The Liquor Policy in April 2023 proposed significant shifts in the toddy-serving landscape by adding hotels and resorts with a three-star rating and above to serve toddy tapped from coconut trees on their premises. The intention of the policy is to realise the potential of tourism and create more job opportunities for youth in the sector. Here comes the question of homestays being allowed to be a part of the policy.

Homestays play a vital role in providing accommodation and a cultural experience of the state to tourists. There are around 4000 homestays operating in the state (Abraham, A. S. 2023). Integration of toddy into tourism in Kerala shall be effective only if toddy is made available in all tourist accommodations, including homestays, that serve the third largest tourism provider in the state.

However, addressing the stigmatisation of toddy tapping industry in the state is imperative for attracting youth into the sector. In 2014, approximately 30,000 toddy tappers were registered with the Kerala Toddy Workers Welfare Fund Board but by 2023, this number had dwindled to less than 15,000. The decline is attributed to various factors, including the negative perception attached to the profession, the subpar quality of toddy, easy access to alternative sources of liquor and the adverse impact of COVID-19 on employment (Arun 2023). CPPR’s stakeholder interactions with toddy tappers highlighted that the stringent regulations on the location of toddy shops have caused the number of toddy shops to decline, thereby affecting their livelihoods. Many of the tappers have shifted their jobs to auto drivers.

To reverse this trend and uplift the industry, increased liberalisation of access to toddy is essential. To revive the industry and drive economic growth, Kerala should consider liberalising access to toddy, drawing inspiration from Maharashtra's successful model. (Tembhekar,C.2023). The Maharashtra government has eased the restrictions on beer and wine markets, allowing roadside cafes and grocery stores to sell beer and wine, respectively. This has increased the consumption of less alcoholic drinks in the state in recent years. The more regulated the sector, the more likely it is for illicit markets to thrive inadvertently, causing greater harm. According to new sources, the less restrictive regime improved the availability of beer and the quality of the product as well (Times of India, 2023).

Liberalisation of the sector can result in greater market integration and attract more investments in the sector, thus improving the livelihood of coconut farmers, toddy tappers and tourism providers in the state. Delicensing the toddy sale can result in more players entering the market and better availability of toddy and value-added products, in turn increasing the tax revenue and income of the stakeholders in the ecosystem. Unlike other alcoholic beverages, toddy is less alcoholic and used as an ingredient for baking and cooking. The government should put in standards and regulations to ensure the quality of the product through certification mechanisms rather than killing the potential of the product through a stricter licencing system.

The 2023 liquor policy allows hotels and resorts to tap toddy from the trees on their premises and restricts the permit to serve toddy during peak tourist seasons. Nevertheless, it is impractical to serve toddy only during certain months, as toddy tapping is a daily activity performed to ensure steady production of toddy. The policy design may fail without serving the intended outcome of attracting more tourists due to its impractical provisions that are restrictive. Hence, policymakers have to rethink the implementation of the policy in a larger context by expanding the scope of the toddy marketplace to include homestays and allowing them to serve fresh toddy to their guests throughout the year.

In a state where the tourism sector promises huge revenue to the state and is one of the largest job providers, integrating natural products like toddy into the sector is imperative for achieving better growth. Excluding homestays from tapping and serving toddy would limit the potential of toddy integration to tourism revenue. The collaboration with homestays fosters a symbiotic relationship, benefiting toddy tappers, coconut farmers and homestay owners economically and facilitating resource utilisation. Through collaboration and innovation, Kerala can position itself as a leader in sustainable liquor policies, driving economic growth while preserving its cultural heritage.

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(Anagha S is a Research Intern and Anu Maria Francis is a Senior Associate - Research at the Centre for Public Policy Research, Kochi.)

Views expressed by the author are personal and need not reflect or represent the views of the Centre for Public Policy Research.