Chhattisgarh has virtually become a dry state for two of the country’s largest liquor firms — United Spirits and Pernod Ricard A year after Chhattisgarh government allowed liquor sales only through government-owned corporations, both companies have now approached the state’s High Court, alleging that the government unit has not been buying their products and are instead involved in unfair practices.“The authorities have failed and omitted to place orders for the petitioners’ products, but local substitutes are available, even though the retail shops controlled by State Corporation have virtually no inventory of the their products,” the companies said in their petition filed with the Chhattisgarh High Court The state earned more than Rs 2,000 crore during FY16-17 as excise revenue on liquor. Diageo-controlled USL owns brands such as McDowell’s No 1, Bagpiper and Director’s Special while Pernod Ricard sells Royal Stag, Seagram’s Imperial Blue and Blender’s Pride among others and together they control nearly three-fourth of the overall whisky market. These companies alleged that the government’s wholesale and retail units are trying to drive them out of the state by favouring other suppliers.“State-controlled retails outlets are selectively maintaining huge stocks of locally manufactured foreign liquor brands of certain select suppliers and are either not maintaining any or negligible stocks of their products. USL and Pernod controlled nearly 80% share of the market until last year which has sharply fallen to less than 30% now. At the same time, locally made foreign liquor brands have seen massive and unprecedented growth in sales in the state, according to their petition which was taken up for hearing on Monday and the court has directed the state administration to respond in ten days.The matter will appear again on May 1.Both USL and Pernod didn’t respond to an email query till press-time. Over the past two years, there has been policy changes in West Bengal, Chhattisgarh and Jharkhand to allow liquor sales only through government-owned corporations, similar to states such as Delhi, Rajasthan, Kerala and Tamil Nadu.Supreme Court restrictions last year on the sale of alcohol near state and national highways led to the closure of about a third or about 30,000 of the country’s liquor vends, causing a drop in demand for beer and spirits. The court subsequently clarified its ruling, easing conditions for liquor sales and allowing many outlets to reopen.Experts said such instances have happened in the past in other states too. “If both companies come together to fight such issues and win, they will get a template on how to deal with the problem elsewhere. Chhattisgarh is a small market with less than 2% of their sales, but there is always a risk of other states having similar issues,” said Abneesh Roy, senior vice-president, institutional equities, Edelweiss Securities.Liquor companies are seeing a revival in consumer demand in the January-March quarter on a low base, especially after the impact of demonetisation (November 2016) wears off, the effect of last year’s highway ban begins to fade away, and increased stability following distribution changes in some states.