Liquor sales in India likely to see new high

With lockdown in India resulting in the closure of all bars and most liquor stores in the country, total beverage alcohol volume declined by close to -30 per cent in 2020. The market is expected to rebound, however, to over +8 per cent volume CAGR 2021-2025. Total spirits are forecasted to grow by almost +5 per cent CAGR 2021-2025, and beer is expected to post growth of nearly +13 per cent volume CAGR during that same period. Whisky in India, the dominant spirits category, was down -16 per cent in 2020, but ultra-premium-and-above Scotch enjoyed growth, as did Irish and Japanese whiskies, driven by wealthy consumers in the market. Unlike many other countries in the region, alcohol ecommerce does not play a critical role, due to government regulations and limited channel investment. Overall the spirits industry volume dropped to 277 million cases from a high of 330 million cases and for beer it dropped to 193 million cases from 300 million cases.

In 2021, there has been a rebound in the second half of the year. Diageo grew 12 per cent, Pernod Ricard grew 19 per cent, Radico Khaitan grew 12 per cent and Bacardi India grew 30 per cent in 2021, one of its highest sales expansion. Despite closure of bars and restaurants, Beer companies saw growth. Heineken owned United Breweries grew 19 per cent and Carlsberg saw volume growth of 30 per cent.

Alcohol consumption is rising. But people are spending more on food and other necessities of life these days. Rapid urbanization and rising income levels are making Indians more quality-conscious rather than becoming price-sensitive. Factoring in the affordability and availability of the premium brands, people are opting to consume IMFL brands rather than local spirits. According to industry data the sales of regular, medium and cheap IMFL products are either on the decline or not growing at all across different markets of India.

By 2023, IWSR expects total beverage alcohol consumption to return to pre-Covid levels, with consumption steadily increasing through to 2025. Recovery will be boosted by the industry pivoting rapidly in key markets, the momentum of ecommerce and RTDs, and increasing sophistication of the at-home occasion in many markets. Long-term volume recovery is forecasted at +1.5 per cent compound annual growth rate 2021 to 2025. The two fastest-growing categories, according to IWSR forecasts, are no-alcohol spirits (projected at +30.6 per cent CAGR 2021-2025), and RTDs (+10.2 per cent).

Another pre-Covid trend that will continue to accelerate beverage alcohol recovery is product premiumisation. Though the economic impact of Covid-19 has led to restricted spending for some, alcohol is an affordable luxury for those willing to spend. IWSR forecasts that premium and above wine and spirits will increase by +25.6 per cent in total volume 2020-2025 (compared to +0.8 per cent volume growth over the same period for brands in lower price tiers.)