Even with bars and restaurants fully operational again, Indians continue to consume more alcohol at home than they did before the pandemic. Tipplers, especially older and wealthier individuals, are choosing premium products for their house parties.
The latest data from global alcohol market analysts IWSR shows that 79.2% of alcohol and beverage volume sales in India last year were ‘off-premise,’ meaning outside of bars and restaurants. While this percentage has decreased from 82.4% in 2022, it still exceeds the pre-pandemic figure of 72.5% in 2019.
During the Covid period, with clubs, bars, and restaurants shuttered, individuals turned to drinking at home. Even after the initial relaxation of restrictions, people persisted in socializing at home. This shift in behavior has endured, and according to companies, one consequence of the pandemic is that many individuals no longer view drinking at home as taboo.
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Premiumization and Cocktail Culture:
“The trend is here to stay as customers realise they can get premium cocktails of a higher calibre for a lot less money than they can at bars. Additionally, they have become proficient in cocktail mixing and can replicate similar experiences at home,” explained Amar Sinha, Chief Operating Officer at Radico Khaitan, known for brands such as Jaisalmer Gin, Rampur Whiskey, and Magic Moments Vodka.
In India, the majority of liquor stores used to resemble small, dilapidated shacks with modest grilles, particularly in smaller towns. However, according to companies, in major metropolitan areas and some large cities, the retail experience has evolved to a more relaxed ambiance, with many liquor shops resembling supermarkets.
In 2019, bars and restaurants comprised 27.5% of total liquor sales in the country. However, in the case of beer, which is more closely associated with outdoor social gatherings than at-home consumption, their share was approximately 40%. Presently, on-trade represents 28.4% of beer sales, indicating a reduced reliance on restaurants for growth as consumers transition to microbreweries.
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“Previously, beer offerings were limited to lager, but now consumers have a plethora of options within the beer segment, including wheat beer, stout, and IPA. Additionally, consumers favor freshly brewed beer served straight from the tap over mainstream bottled varieties, which has fostered the growth of microbreweries,” explained Teja Chekuri, Managing Partner at Ironhill India, the operator of India’s largest brewery.
On a global scale, on-trade consumption, or drinking at bars and pubs, surpasses that of India, which faces challenges such as a limited number of venues with liquor licenses. Additionally, with most alcohol and beverage companies prioritizing the sale of fewer but higher-quality products, this trend aids their promotion of more expensive products and encourages experimentation.
Meanwhile, the growth rate in the overall spirits market has decelerated from the 12-15% observed in the post-Covid years to 4% in the last fiscal year. This slowdown can be attributed in part to consumers’ reluctance to spend on discretionary products.
“Customers are becoming more frugal with their money by attending fewer social events, which highlights how crucial it is to establish brand equity. They remain loyal to high-quality brands,” stated Hina Nagarajan, Managing Director and Chief Executive of United Spirits, during an earnings call with analysts. “So, despite moderation and consumption slowdown in certain segments due to financial constraints, consumers are not compromising on quality.”
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