The Liquor Retail Route

For the liquor industry distribution is the key. CSD, QSRs are now getting into the limelight.

The Canteen Stores Department or CSD as it is fondly known in marketing circles, and a not-for profit organisation, earned ₹236 crore during FY14-15. Considered in liquor marketing circles to be the route to creating Millionaire Brands it is known to buy huge volumes at low prices as no taxes are involved. The resulting disruptive prices results in huge sales and high profits.

CSD's operating margin is 1%, which it claims on its website is lowest for any retailer in the world. For most consumer product and liquor companies, CSD accounts for 5-7% of their total volume sales.

The huge profits have been better than even D'Mart stores, that made a profit of ₹211crore that year, Future Retail which made ₹153 crore and Reliance Retail ₹159 crore. However in all fairness none of the retail stores can match the heavy discounted prices accorded to CSD as their goods are for the armed forces.

The CSD's retail outlets sell 5,300 products ranging from biscuits and beer to shampoos and cars to 12 million consumers — personnel of the army, navy and air force, ex-servicemen and their families. Started in 1948, it is managed by the defence ministry and comprises 3,901 unitrun canteens and 34 depots. It has more than 600 suppliers competing to provide a range of products including toiletries and cosmetics, household goods, footwear and accessories, food items, stationery, electronics and consumer durables, liquor and vehicles.

Vendor companies offer slightly better discounts to CSD than to local kiranas, products are still sold at very low prices because the government waives a substantial amount of taxes.