The domestic alcoholic beverages sector is expected to see 8-10% revenue growth in FY25, driven by strong demand for beer, a revival in spirit consumption, and an increasing consumer preference for premium products, according to a report.
According͏͏ to͏͏ the͏͏ credit͏͏ rating͏͏ agency͏͏ ICRA,͏͏ the͏͏ revenue͏͏ growth͏͏ in͏͏ FY25͏͏ will͏͏ also͏͏ be͏͏ bolstered͏͏ by͏͏ price͏͏ hikes͏͏ granted͏͏ by͏͏ several͏͏ state͏͏ governments͏͏ in͏͏ the͏͏ current͏͏ fiscal͏͏ year.
Spirits͏͏ Industry͏͏ Reports͏͏ 9%͏͏ Revenue͏͏ Growth͏͏ in͏͏ Q1͏͏ FY25:
In͏͏ Q1͏͏ FY25,͏͏ the͏͏ spirits͏͏ industry͏͏ recorded͏͏ a͏͏ 9%͏͏ year-on-year͏͏ increase͏͏ in͏͏ revenues,͏͏ bolstered͏͏ by͏͏ a͏͏ 5-7%͏͏ improvement͏͏ in͏͏ realisations,͏͏ with͏͏ volumes͏͏ growing͏͏ by͏͏ 2-4%.
The͏͏ report͏͏ indicates͏͏ that͏͏ the͏͏ beer͏͏ industry͏͏ saw͏͏ a͏͏ revenue͏͏ growth͏͏ of͏͏ 12%͏͏ in͏͏ Q1͏͏ FY25,͏͏ driven͏͏ by͏͏ a͏͏ 3-5%͏͏ increase͏͏ in͏͏ volumes͏͏ and͏͏ a͏͏ 7-9%͏͏ rise͏͏ in͏͏ realisations.
Continue͏͏ Exploring:͏͏ India’s͏͏ alcoholic beverage market͏͏ surges͏͏ to͏͏ record͏͏ highs,͏͏ premiumization͏͏ and͏͏ home͏͏ consumption͏͏ drive͏͏ growth
Volume͏͏ Growth͏͏ Expectations͏͏ Rise͏͏ for͏͏ FY25:
Kinjal͏͏ Shah,͏͏ SVP͏͏ and͏͏ Co-Group͏͏ Head͏͏ of͏͏ Corporate͏͏ Ratings͏͏ at͏͏ ICRA,͏͏ mentioned͏͏ that͏͏ the͏͏ volume͏͏ growth͏͏ in͏͏ the͏͏ alcoholic͏͏ beverages͏͏ industry͏͏ is͏͏ expected͏͏ to͏͏ improve͏͏ to͏͏ 5-6%͏͏ in͏͏ FY25,͏͏ up͏͏ from͏͏ 4%͏͏ in͏͏ FY24.
ICRA͏͏ anticipates͏͏ that͏͏ spirits͏͏ volumes͏͏ will͏͏ grow͏͏ at͏͏ a͏͏ moderate͏͏ pace͏͏ of͏͏ 2-4%͏͏ in͏͏ FY25,͏͏ bolstered͏͏ by͏͏ favourable͏͏ demographics͏͏ and͏͏ a͏͏ limited͏͏ increase͏͏ in͏͏ taxes͏͏ expected͏͏ for͏͏ the͏͏ year.
“We͏͏ anticipate͏͏ moderate͏͏ growth͏͏ of͏͏ 5-7%͏͏ for͏͏ beer͏͏ volumes͏͏ in͏͏ FY25,͏͏ considering͏͏ a͏͏ high͏͏ base,”͏͏ said͏͏ Shah.
Manufacturers͏͏ experienced͏͏ a͏͏ rise͏͏ in͏͏ grain͏͏ costs͏͏ in͏͏ the͏͏ first͏͏ half͏͏ of͏͏ FY25,͏͏ driven͏͏ by͏͏ a͏͏ 20-25%͏͏ increase͏͏ in͏͏ non-basmati͏͏ rice͏͏ prices,͏͏ while͏͏ barley͏͏ prices͏͏ remained͏͏ relatively͏͏ stable.
However,͏͏ non-basmati͏͏ rice͏͏ prices͏͏ have͏͏ started͏͏ to͏͏ soften͏͏ since͏͏ July͏͏ 2024.
Additionally,͏͏ the͏͏ costs͏͏ of͏͏ packaging͏͏ materials,͏͏ specifically͏͏ glass͏͏ bottles,͏͏ decreased͏͏ this͏͏ year͏͏ due͏͏ to͏͏ a͏͏ significant͏͏ correction͏͏ in͏͏ soda͏͏ ash͏͏ prices.
“This,͏͏ along͏͏ with͏͏ the͏͏ price͏͏ hikes͏͏ implemented͏͏ by͏͏ various͏͏ state͏͏ governments͏͏ at͏͏ the͏͏ start͏͏ of͏͏ the͏͏ fiscal͏͏ year,͏͏ is͏͏ anticipated͏͏ to͏͏ maintain͏͏ the͏͏ operating͏͏ profit͏͏ margin͏͏ (OPM)͏͏ for͏͏ ICRA’s͏͏ sample͏͏ set͏͏ of͏͏ companies͏͏ at͏͏ 12-13%͏͏ in͏͏ FY25,”͏͏ Shah͏͏ added.
