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ECONOMY
The Great Indian Sin Factory
As Indians lap up more of vice products, profiteers and investors are readying to lick up the spoils of the new consumption patterns
PUJA MEHRA
30 May 2008
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| (Photograph: Dreamstimes) |
Matrimonial bliss eludes Sandeep. His career isn’t going great guns. Unable to salvage either, the Delhi-based 35-year old has found refuge in chilled beer three times a week, pirated porn DVDs every other night and an extra-marital affair with a married co-worker, Sati, that entails spending 30-45 minutes in a seedy, nondescript room at a Paharganj Hotel every Thursday. The bill for Sandeep’s gratification adds up to about Rs 1,500 for most weeks — a tenth of his weekly earnings. His colleague and confidante, 40-but-still-looking Priyanka, secretly nurtures a crush on him. Twice a month, Priyanka takes Sandeep out for dinner and drinks to the Capital’s high-society clubs and pubs. On average, the extravaganzas easily bump a couple of grands off her an outing.
Sandeep and Priyanka are prototypes of an India in which changing lifestyles are spawning indulgences of new kinds. Wallets in this New India are loaded with the trickle-downs of the 9 per cent-plus economic boom and mental make-ups are becoming inhibition-free. A new breed of sin consumers is emerging, which needs its regular fix of entertainment and pleasure. The reins of “good girls don’t smoke and nice boys don’t drink” on the till-now-abstinent middle class are loosening, opening a new market for sins. The shift in tastes has lifted India’s sin economy to about Rs 300,000 crore a year — or nearly a tenth of the GDP.
The trigger for the bingeing isn’t always personal or professional problems. Sin consumers haven’t learnt to resist the forbidden. The give-in to temptation isn’t limited to the cosmopolitan sin-city-bred yuppies. Nearly every family, every town is teeming with habitual and occasional consumers of tobacco, alcohol, gambling and sleaze. “As cultural values are eroding, the young are taking to maladaptive coping with stress,” says a psychiatrist at AIIMS, Ramesh Sagar. The trend is fast closing the ranks between the two other sections of society that have traditionally devoured sin — the moneyed and the poor. Morals or religion never caught a toehold between India’s rich and their pleasures. Indulgences in women and wine define zamindars in villages. Liquor, lotteries and illicit, paid-for sex form the rungs of the Ladder Of Escapism from suffering for the impoverished masses.
Sinonomics
How sin is defined varies depending on the religious and political leanings. A purely conventional approach would include intoxication, gambling and sleaze. The Rs 3,00,000-crore estimate for the market for these is just the dog’s tail. Large swathes of the sin economy are grey or underground. The US sin economy, in comparison, forms less than 1 per cent of its $13.8-trillion GDP.
The habit-forming nature of vices makes the business of sin a high-growth industry. Sniffing opportunity, profit-savvy business-owners are bedecking shop shelves with a glut of vice products. “Sub prime or no sub prime, everybody still needs a drink,” liquor baron Vijay Mallya had declared at the Fortune Forum last October in Delhi. The robustness of the alcohol industry found an echo in the trebling of the profits of his flagship company, United Breweries, last fiscal.
The West has formalised the concept of ‘sin stocks’ to profit from the high growth. In the US, a range of mutual funds focused on sin stocks, akin to sectoral funds, are on offer. One of them, the $124 million Vice Fund has outperformed the market (S&P 500 stock index) in each of the five years it has been trading. “India’s investment universe for such a strategy is limited, as most companies engaged in these activities are unorganised,” says Franklin Templeton’s senior portfolio manager for equity Sivasubramanian K.N.
Organised or not, the sin industry in India is doubling every year, beating growth in star sectors such as telecom, which is growing at 30 per cent annually. Supermarkets are vending alcohol, and illicit sex is available at the click of a mouse. “After a hard day’s work, I love to unwind at pubs,” says Kimi Singh, 32, a Bangalore-based software engineer. Her reclusive brother, a stockbroker in Mumbai, never goes pubbing. “Manish prefers adultfriendfinder.com to bars and pals,” giggles Singh, releasing grey curls and a twirl of cigarette smoke.
On A High: Alcohol
While inhibitions go up in smoke, India is becoming one of the fastest growing alcohol markets, according to Mumbai-based stock research outfit SSKI. Indians guzzled 350 million cases of alcohol and 225 million cases of country liquor last year, splurging in excess of Rs 11,401 crore. “The biggest rise in demand is from the DINK couples (Double Income No Kids),” says Vijay Rekhi, president of UB Group, India’s largest alcohol maker. From McDowell’s No 1 to Royal Challenge and Antiquity to the Scotches, all saw steeper growth than the group’s profit. As its coffers swell, the UB Group is snapping up global giants including Whyte & Mackay.
Then, the beer business in India is expanding by 15-16 per cent annually. “Drinking beer is no longer a taboo,” says beer major Carlsberg, India’s MD Pradeep Gidwani. Beer cans are the most-sold item at some of the in&out stores at BPCL petrol stations. In some stores, beer accounts for more than half the business on most days. New players such as UK-based brewer Karan Bilimoria’s Cobra beer are flocking in. Cobra has just committed $100 million to its India business.
Stimulants Galore: Tobacco
The late diplomat and the country’s first Prime Minister Jawaharlal Nehru’s sister, Vijay Laxmi Pandit, was amongst the first Indian women to smoke publicly pre-Independence. Since then, many more have picked up the habit. More than 10 per cent of the world’s smokers now puff away in India, according to the WHO. Tobacco companies are digging gold as Indians smoke 110 billion cigarettes a year. ITC, which made seven of every 10 cigarettes sold last year, saw its profits and sales grow by 20-21 per cent. The large-yet-unorganised bidi industry is flourishing, too, rolling out 1,080 billion sticks worth Rs 76,000 crore a year.
Even cigars, which were the choice of connoisseurs, have caught on. Four million were sold last year, up 35 per cent from the previous year. “Cigars are no longer for the grey-haired achiever alone,” says Godfrey Phillips India’s CEO Amrish R. Anand. “The middle class is the biggest consumer of the Rs 5 to Rs 50-a-piece cigars.” Its Rs 50,000-3 lakh-a-piece Davidoff humidors are flying off the shelves, lifting the importer’s profits by a whopping 47 per cent.
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BEER WITH BARON: The
Vijay Mallya-owned UB
Group’s net profit more
than trebled last year and
the liquor baron is busy
making foreign acquisitions
(Bloomberg) |
Hard Selling: Sleaze
More than tobacco and alcohol, sleaze is in. “Sex” and “B**bs” is what adolescents are googling in non-metros such as Indore and Jaipur. The two words tend to be the most-searched on Google Hindi. According to the 2005 Durex global sex survey, one in every three Indians is consuming pornography, an outlawed indulgence. A shop owner in Delhi’s smuggled-goods haven, Palika Bazaar, reveals a third of the shoppers of porn are women. The annual consumption of online adult content is worth Rs 5,500 crore, as per the Internet and Mobile Association of India. “About 80 per cent of all internet traffic and 60 per cent of the revenues are adult content and gambling related,” says the association’s President, Subho Ray. Of the over 260 porn sites launched daily, a high proportion is targeted at Indians. The owners, of Indianpassion.com for instance, are hosting the sites offshore to beat India’s anti-porn laws. And the bees have naturally got a whiff of the honey pot. AdultVest, the only adult industry-dedicated fund, has just been floated in the US. Nearly 750 adult companies have beseeched its $7-billion pool of 3,600 investors, including porn hopefuls targeting India.
That’s not all. The India edition of the men’s magazine, Maxim, which features scantily-clad women, is selling 100,000 copies per issue —half of them in small obscure towns such as Rohtak — within two years of its launch. “Half the letters to the magazine come from subscribers in far-off places such as Raipur, in broken English, and demanding nude coverage of some star,” says a Maxim editor, Colin Fernandes. The magazine is legit yet often categorised as soft porn, much to the chargin of its owners and staff. Playboy, too, has announced an Indian laws-compliant edition. The New York-based 50-year-old salesman-turned-porn-king, Richard Menon, says, “I get 10 emails a week from fans in India.” Menon has produced films at the rate of six a year in the past two years. “I don’t have a single copy of The Masturbation Tape left,” he says of his debut blockbuster.
Aside of sleaze, paid-for, illicit sex is a Rs 2,000 crore-a-year business. There are over 3 million sex workers in India, of which 40-45 per cent are children. “From the Grant Road Bridge to the beaches of Juhu, our business is everywhere,” says Gulabi, a 28-year-old prostitute in Mumbai’s red-light area of Kamtipura, where hourly rates go up to Rs 3,000. Massage parlours, love nests in hotels, friendship clubs offering clandestine premium escort services, too, are proliferating.
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