Cheers to Growth: Indian Alcoholic Beverages Industry Anticipates 7-8% Surge as 2023 Draws to a Close

As the curtain falls on 2023 and people prepare to usher in the holiday season, the domestic alcoholic beverages industry is poised for a sales upswing, driven by in-home gatherings and festive revelries. Industry experts are optimistic about a collective 7-8% growth for the liquor industry.

According to Mint, October to December marks the peak season for the Indian industry, fueled by an increased demand for premium alcohol. Shweta Jain, Chief Business Officer of luxury, reserve, and craft portfolio at Diageo India, emphasized the sustained strength of premiumization trends. Indian consumers are reportedly leaning towards quality over quantity, seeking refined experiences and the finest offerings, whether celebrating at home or outside.

The recent decision by the Manipur government to legalize liquor in specific areas is expected to further boost sales. The withdrawal of prohibition in selected regions is seen as a shift in government perspective, recognizing the industry’s role as a vital source of tax revenues and economic well-being.

Tushar Bhandari, Whole Time Director of Associated Alcohols Breweries Ltd, expressed a positive outlook for the holiday season, anticipating a surge in demand for premium alcohol, particularly Rum and Whiskey.

Vinod Giri, Director-General of the Confederation of Indian Alcoholic Beverage Companies (CIABC), echoed this sentiment, highlighting the peak season from October to December. Despite some pricing challenges in Karnataka due to tax increases, early market indicators were favorable.

Nita Kapoor, CEO of the International Spirits and Wines Association of India (ISWAI), predicted a 4% growth in the brown spirits market during 2023-24, with an expected 10-12% growth in the second half of the year.

Examining regional trends, Giri noted that peninsular India holds the key to the Indian alcoholic beverages market, contributing over 50% of liquor and beer sales. Karnataka emerged as the largest-selling state, while Delhi NCR and the Mumbai metropolitan region remained the largest markets, accounting for two-thirds of the liquor business.

Looking ahead to 2024, the Indian alcoholic beverage market is poised to reach $64 billion in five years, securing its position as a top global contributor. Jain of Diageo India emphasized that trends such as in-home celebrations with a focus on memorable experiences are likely to persist.

However, industry experts anticipate challenges related to inflation, ethanol blending programs, glass prices, and fuel costs. The Australia-India Economic Cooperation and Trade Agreement is expected to facilitate the accessibility of Australian premium wine in the Indian market.

The industry’s expectations hinge on state-wise taxation policies and ongoing free trade agreement discussions that could impact the industry’s future. Challenges such as high glass prices and inflation, particularly in Extra Neutral Alcohol (ENA), remain key concerns for the industry.