India’s appetite for alcoholic beverages is rising at an unprecedented rate, fueled by a burgeoning middle-class demographic and its enduring love for whiskey. Over the course of almost a decade, the domestic spirits market has experienced a remarkable surge, with annual sales increasing by 100 million cases, soaring from 228 million cases in FY11 to 330 million in FY18.
However, following a downturn during the pandemic when the spirits market dipped to 311 million cases in FY21, it swiftly rebounded, adding approximately 100 million cases in annual sales within a mere three years. According to industry executives, citing the latest excise department data, sales surged to 412 million cases in FY24.
Annual sales growth in India since FY21 have surpassed the total spirits consumption of the UK, France, and Spain combined.
This is despite market growth slowing to 4% in the year ended March 31, which is a third of the growth rate seen in the previous two fiscal years. Companies attribute this phenomenon to the thriving demand across various categories and price ranges. Particularly, there’s a surge in demand for premium products and a noticeable trend toward at-home consumption.
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We believe consumers should prioritize quality over quantity in their drinking choices. With 20 million individuals reaching legal drinking age in India annually, our focus remains consistently on promoting diverse drinking experiences rather than sheer volume. Despite this, India’s per capita alcohol consumption remains relatively low compared to many developed nations, indicating significant potential for growth in the years ahead,” stated Vikram Damodaran, Chief Innovation Officer at Diageo India.
Although the spirits industry has returned to stable growth levels following the 12-15% spikes witnessed in the post-Covid years, premiumization has remained a consistent trend across categories, contributing to overall value growth.
Of India’s almost 1.4 billion people, roughly 300 million are of legal drinking age. However, over half can only afford low-cost, unbranded spirits. The fast rising middle-class population that can afford premium-and-above liquor brands is approximately 150 million.
“In recent years, we’ve witnessed a notable transformation in consumption behaviors driven by premiumization and increased out-of-home consumption. Premiumization remains a strong force in our industry, propelled by the dynamic economy, rising disposable incomes, and evolving consumer aspirations. This trend is especially encouraging as consumers increasingly emphasize value over volume, resulting in sustained double-digit growth across premium categories,” remarked Jean Touboul, CEO of Pernod Ricard India.
He expressed optimism regarding the overall outlook for the Indian alcobev industry.
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