India’s liquor industry is poised for a noteworthy fiscal upturn, with a projected revenue surge of 12-13 percent in the current financial year, reaching INR 4.45 lakh crore. This optimistic outlook is attributed to robust demand and an emphasis on premiumization, as highlighted in a recent report by Crisil.
Last fiscal year witnessed a growth of 15-16 percent in the industry.
“The growth will be driven by a rebound in tourism and hotel industries, rising disposable incomes and premiumisation trend,” said Rahul Guha, director, Crisil Ratings.
He mentioned that the premium segment, defined by bottles priced at over INR 1,000 per 750 ml, is projected to expand by more than 20 percent. In contrast, the price-sensitive mass consumer segment, encompassing liquors priced below INR 700 per 750 ml bottle, is anticipated to witness a volume growth ranging between 5-7 percent.
The liquor industry drives about 65-70 per cent of its revenues from distillers who make IMFL and the remaining 25-30 per cent from brewers, that is beer production. Jayashree Nandakumar, director, Crisil Ratings commented, “Brewers will see an expansion of 250 bps, while distillers will witness 70-80 bps improvement this fiscal.”
“Overall, the industry will toast a blended 100-150 bps expansion in operating profitability this fiscal,” she added.
The report emphasized that the operating profitability of players will see advantages not only from the expanded revenue base but also from the easing of input costs, including Extra Neutral Alcohol (ENA), barley, and packaging costs.