It’s a familiar scenario. You’re hosting friends for a little house-party and the drinks are on you. You could choose one of the two options — stop by the neighbourhood liquor store and pick up a few bottles or contact your neighbourhood bootlegger and get him to deliver what you need. Only, the second option isn’t a formal, regulated, legitimate business.
“Unregulated delivery of alcohol to customers’ homes happens every day, and is part of an informal sector,” says Prasanna Natarajan, Founder and CEO, HipBar, adding “We want to transition it from an informal business to a formal one. This way, alcohol-delivery moves from being a favour to an actual paid-for service.”
Prasanna founded HipBar in 2015. In the last three years, the startup has built a payment gateway for customers who want to pay digitally for their alcoholic beverages through a series of partnerships with alcohol retail stores in Karnataka and Tamil Nadu. The payment gateway allows customers to reserve a drink online, pay for it, and even gift an alcoholic beverage to a friend, thereby doubling up as a ‘cloud service’ for consumption. But the startup wants more. HipBar wants to start delivering alcohol to customers’ homes, banking on strong market potential.
“There’s a possibility of clocking nearly 20,000 to 25,000 orders per day in Karnataka alone, which could total to approximately Rs 650 crore of alcohol sales per month in the market,” says Prasanna. “That number could go as high as Rs 1,000 crore for a market like Mumbai.”
The problem, however, lies in convincing state governments to regulate and legitimise a business that has largely belonged to the informal sector, albeit unregulated. HipBar nearly pulled that off in 2017, when it delivered to 100 PIN codes in Bengaluru, for a period of 15 months, clocking nearly 75,000 orders in the period. But the startup had to put a premature end to the business after a section of offline alcohol retail stores began protesting the business for fear of losing out on business.
HipBar isn't alone. For a while, startups in Mumbai like HipCask, WineBazar.in and LetsBuyDrink.com had tried doing business in the space, by facilitating home-delivery of alcoholic beverages. However, that model was short-lived owing to several grey areas concerning the very legality of the business. Like HipBar, delivery app Dunzo was also engaged in delivering alcohol to customers' homes in Bengaluru, before it decided to impose restrictions on the "delivery of bottled alcoholic beverages", in early 2018.
While there were reports that Maharashtra was re-thinking its stance on alcohol delivery in favour of allowing it, chief minister Devendra Fadnavis has reportedly shot down the idea in the past, seemingly pressured by allies like the Shiv Sena. But HipBar says it’s confident of re-starting the business in other states. “We are in talks with state governments in Tamil Nadu, Karnataka, Punjab and New Delhi,” says Prasanna.
Strange and interesting as it might sound, HipBar claims alcohol-delivery could help customers consume alcohol more responsibly. “In most cities, alcohol retail stores are places customers don’t want to spend too much time in. As a result, they often end up buying more than they want to, so as to stock up and avoid returning to the store,” says Prasanna. “In the Swiggy-styled model of delivery, ordering just one bottle is possible. Customers will then start ordering only the alcohol that they need, and not with an intention to stock up.”
HipBar claims its proposed delivery protocol is as transparent as can get. “Our compliance protocol ensures that age-verification is done by the delivery agent,” explains the company’s COO, Prashant Adurty. “The provision of digital payments also means that buyers end paying the actual price of a product and more as per the whims and fancies of the cashier at a store,” he added.
The startup’s claim to legitimacy and transparency is that its payment gateway and proposed online delivery through e-commerce leaves behind a digital footprint, which ensures transparency vis-a-vis products ordered, size of shipments and payments made.At present, HipBar’s digital payments gateway is accepted across 30 State-run TASMAC outlets in Tamil Nadu, and liquor stores in Karnataka. In 2017, United Spirits Limited acquired 26 percent stake in the startup for Rs 27 crore.