The country’s growth potential for premium spirits remains high

Unsurprisingly, continued premiumization in India is being driven by this rising wealth, an emerging consumer base and an overwhelmingly positive outlook across almost all personal trust metrics

India offers strong growth prospects for beverage alcohol companies in 2024 and beyond, driven by a mix of positive demographics, premiumization, an increasingly sophisticated retail channel and an increasingly adventurous consumer base.

Growing demand for premium and imported brands as well as the rise of craft spirits and microbreweries are expected to boost the growth of the alcohol industry in India. Likewise, the increasing popularity of experiential venues that cater to different consumer preferences is likely to boost alcohol sales in the country.

The premiumization trend is shaping the spirits landscape, with consumers increasingly opting for higher quality and more unique spirits. According to the Confederation of Indian Alcoholic Beverage Companies, products priced above ₹2,000 per bottle have seen steady sales growth. Local craft brands, particularly in whisky, gin and rum, are gaining traction as consumers favor “quiet luxury” and niche, small-batch production.

This trend is in line with India’s cultural preference for products with strong origin stories and craftsmanship qualities. Premiumization is expected to continue to be a determining factor, attracting both international and domestic players who can offer premium options.

The market could be further boosted by easing the complex and burdensome regulatory framework and reducing high taxes, also thanks to the likely signing of free trade agreements, for example with the United Kingdom.

Consumers have long been attracted to the sought-after status of imported products such as Scotch whisky, but are also increasingly proud of the rising quality levels of domestic spirits, some of which now compete with imports in terms of prestige and price. Craft gins and Indian single malts currently embody this reassessment.

India offers a beverage alcohol market with strong growth prospects. Against the backdrop of +1 percent volume growth in total global beverage alcohol in 2022, spirits volumes in India increased by +12 percent, with beer increasing by +38 percent, wine increasing by +19 percent and RTDs increasing by +40 percent.

In all cases, value grew faster than volume. The IWSR forecasts indicate a continued upward trend.

Imported spirits and wines, while dwarfed by IMFL (Indian Made Foreign Liquor) sales, remain a notable and still growing part of demand, leveraging local premiumization dynamics.

Importantly, Indian consumers are used to international-style products. They know their uses, they enjoy them and have long been willing to spend a little more on imported – and now local – products.

Unsurprisingly, continued premiumization in India is being driven by this rising wealth, an emerging consumer base and an overwhelmingly positive outlook across almost all personal trust metrics.

Value growth continues to outpace volume gains in alcoholic beverages, with an IWSR consumer study indicating an increase in reported spending and consumers expressing their intention to prioritize higher value beverages.

A number of local players operating in the budget segment are now offering credible premium quality spirits at premium prices.

The TBA market remains focused on spirits (which represent 53 percent of TBA volume) and whiskey (66 percent of spirits volume), but the scene is evolving as consumers expand their repertoire and bring previously niche categories into the mainstream.

Agave spirits grew triple digits in the first half of 2023 (from a small base), and there was very strong double digit growth in Irish, American and Japanese whiskeys as well as spirits aperitifs.

As the country’s excise policy has evolved, so has its retail offering, providing the perfect environment for continued premiumization.

Haryana has a number of well-lit, attractively equipped and conveniently located branches, some of which are open 24 hours a day and have well-informed, young staff. Many have BYOB branches just steps away.

“Positive changes in the alcohol purchasing experience are having real impact. It’s a virtuous circle – attractive outlets bring in more consumers and generate more revenue for both licensees and the state,” said Jason Holway, senior research advisor at IWSR.

“That then leads to changes elsewhere.” For example, premium alcohol outlets are now allowed in shopping malls in Uttar Pradesh. In Gujarat, an arid state, alcohol is available for sale at GIFT City, a landmark development. Continuous steps rather than abrupt changes are essential to avoid backlash,” he added.

Building a business in India is slowed by bureaucracy and the advisability of consolidating in one state before moving on to the next. Nevertheless, India remains an increasingly attractive trading partner with which both the UK and the EU want to conclude free trade agreements soon.

This should be good news for importers and exporters, as the prospect of cost relief for Scottish industry proves particularly attractive.