The Country’s Growth Potential For Premium Spirits Remains High

Unsurprisingly, ongoing premiumization in India is being driven by these rising levels of affluence, an aspirational consumer base and an overwhelmingly positive outlook across almost all personal confidence metrics

India offers strong growth prospects for beverage alcohol companies in 2024 and beyond, driven by a mix of positive demographics, premiumisation, an increasingly sophisticated retail channel, and a progressively more adventurous consumer base.

Growing demand for premium and imported brands and the rise of craft spirits and microbreweries are expected to boost the growth of the alcohol industry in India. Similarly, the increasing popularity of experiential drinking venues catering to diverse consumer preferences will likely fuel alcohol sales in the nation.

The premiumization trend is shaping the spirits landscape, with consumers increasingly opting for higher-quality and more unique spirits. Products priced above ₹2,000 per bottle have seen steady sales growth, according to the Confederation of Indian Alcoholic Beverage Companies. Local craft brands, particularly in whisky, gin, and rum, are gaining traction as consumers embrace “quiet luxury” and niche, small-batch production.

This trend aligns with India’s cultural preference for products with strong origin stories and artisanal qualities. Premiumization is expected to continue as a defining factor, attracting both international and domestic players who can offer premium choices.

The market could be boosted further by relaxation of the complex and burdensome regulatory framework and reduction of high taxes, thanks in part to the likely signing of free trade agreements, such as that with the UK.

The consumers have long been drawn to the aspirational status of imported products like Scotch whisky, but they are also increasingly taking pride in the rising quality levels of domestic spirits, some of which now rival imports in terms of prestige and pricing. Craft gins and Indian single malts currently epitomise this reappraisal.

India offers a beverage alcohol market with strong growth prospects. Against a backdrop of a +1 per cent volume growth for global total beverage alcohol in 2022, spirits volumes in India increased by +12 per cent, with beer up +38 per cent, wine up +19 per cent and RTDs up +40 per cent.

In all cases, the value grew ahead of volume. IWSR forecasts indicate a continued upward trajectory.

Imported spirits and wines, while dwarfed by sales of IMFL (Indian Made Foreign Liquor), remain a notable and still growing element of demand, tapping into the local premiumisation momentum.

Importantly, Indian consumers are accustomed to international-style products. They know their applications, they enjoy them and they have long been open to spending a little more on imported – and now also local – products.

Unsurprisingly, ongoing premiumization in India is being driven by these rising levels of affluence, an aspirational consumer base and an overwhelmingly positive outlook across almost all personal confidence metrics.

Value growth continues to outpace volume advances across beverage alcohol, with IWSR consumer research indicating an uptick in claimed spend, and consumers stating an intention to prioritize higher-

A number of local players operating at the value/low-price end of the market are now offering credible, premium-quality, premium-priced spirits.

The TBA market remains skewed to spirits – accounting for 53 per cent of TBA volumes – and whisky (66 per cent of spirits volumes) but the scene is evolving as consumers expand their repertoires and bring previously niche categories into the mainstream.

Agave spirits grew by triple digits (off a small base) in the first half of 2023, and there was very strong double-digit growth for Irish, American and Japanese whiskies, and for spirit aperitifs.

As the country’s excise policy has evolved, so has its retail offer, providing the perfect environment for ongoing premiumisation.

Haryana has a number of well-lit, attractively fitted and conveniently located outlets, some of them open 24/7 and staffed by well-informed, young employees. Many have BYOB outlets just footsteps away.

“Positive changes in the experience of buying alcohol are having a real impact. It’s a virtuous circle – attractive outlets bring more consumers and deliver more revenues, both to the licence-holders and the state”, opined Jason Holway, senior research consultant at IWSR.

“This then prompts change elsewhere. For instance, premium alcohol outlets are now permitted in malls in Uttar Pradesh. In Gujarat, a dry state, alcohol will be on sale in GIFT City, a signature development. Steady steps rather than abrupt change are essential to forestall any backlash,” he added.

Building a business in India is slowed by bureaucracy and the advisability of consolidating in one state before moving on to the next. Nevertheless, India remains an increasingly attractive trading partner and one with which both the UK and the EU hope to imminently conclude FTAs.

That should be good news for importers looking in and exporters looking out, with the prospect of an easing of the cost burden proving especially attractive for the Scotch industry.