The Indian alcohol market comprises alcoholic beverages such as beer, spirits, and wine. Beer and spirits together account for over 90% of the total alcohol market in India owing to their appeal amongst young drinkers. The market is dominated by country-made or imitation country liquor popularly known as 'IMFL' which contributes approximately 70% of the total market volume. Beer consumption is witnessing strong traction due to rising disposable incomes, exposure to global alcohol brands, and increasing social acceptability of alcohol amongst younger generations.
Indian Alcohol Market is estimated to be valued at US$ 5 billion in 2024 and is expected to exhibit a CAGR of 7.5% over the forecast period 2024 To 2031.
With a population of over 1.3 billion and a large youth demographic, India presents significant India Alcohol Market Growth potential for alcohol producers. The market offers advantages such as affordability, increasing experimentation with premium and foreign brands, and versatile drinking occasions across festivals and social events. However, regulatory hurdles and cultural abstinence pose challenges to the organized alcohol sector in India.
Key Takeaways
Key players operating in the Indian alcohol market are Diageo, United Spirits, Pernod Ricard, Radico Khaitan and Johnnie Walker. Diageo dominates the premium whisky segment with its iconic brands like Johnnie Walker and VAT 69. United Spirits leads the Indian liquor industry with its popular brands such as McDowell's No.1, Royal Challenge, and Bagpiper.
Growing disposable incomes and urbanization are fueling a consumption boom in India's alcohol market. The average monthly spending on alcohol per drinker surged over 60% from 2016 to 2021. Young urban Indians are willing to experiment and pay more for quality and unique drinking experiences.
Advanced production technologies and innovative packaging solutions are enhancing consumer experience with Indian-made alcohol. Companies are offering modular bottling lines, versatile packing formats and employing blockchain to curb counterfeiting and under-age sales. New brewing techniques assist in creating customized flavors and extending the shelf-life of beer.
Market Trends
The premiumization India Alcohol Market Size and Trends is on the rise as consumers aspire for imported and craft alcohols. Indian drinkers are displaying appetite for premium whisky, wine, beer and cocktail experiences. This presents opportunities for global spirits and beer leaders to target younger affluent patrons.
Wellness becomes a priority across age groups amid COVID disruptions. Low and low-alcohol innovations are gaining ground with health-conscious urban Indians. Products with natural ingredients and functional benefits are enhancing the culture of responsible drinking in the country.
Market Opportunities
The market represents uncharted potential for wine and craft beer players. With expanding middle-class and exposure to world cuisines, wine consumption in urban India is accelerating rapidly. This provides scope for New World and domestic wine producers.
E-commerce and direct-to-consumer strategies can expand reach into untapped pockets. Online alcohol platforms enable customers across smaller cities and towns to access unique brands conveniently. This overcomes traditional distribution and opens new avenues for small craft manufacturers.
The COVID-19 pandemic has significantly impacted the growth of the India alcohol market. Before the outbreak, the market was growing steadily at around 7.5% CAGR driven by rising disposable incomes, growing social acceptance and changing lifestyles. However, the imposition of nationwide lockdowns brought the market to a standstill due to the closure of on-trade establishments like bars, pubs and restaurants.
The on-trade segment, which includes establishments selling alcohol for consumption on the premises, accounts for around 40% of the total market revenue. With social distancing norms in place, consumption through the on-trade segment declined drastically impacting overall market growth in the short term. Manufacturers faced disruptions in production and supply chains. Closed borders also impacted imports and exports of alcoholic beverages.
As lockdowns ease, companies are focusing on increasing offline and online retail sales to revive demand. The off-trade segment selling alcohol for consumption off-premises is expected to drive recovery. Companies are also introducing affordable products, special offers and tailored digital campaigns to attract consumers. They are actively engaging with local authorities to restart on-trade sales gradually with necessary safety protocols. In the long run, factors like growing aspirations of youth, western influences and promotions by manufacturers are likely to support market growth albeit at a slower pace than pre-pandemic levels. Sustaining demand through new product launches, optimized channels and tailored marketing strategies will be crucial for industry players.
In terms of value, the India alcohol market is highly concentrated in the southern states led by Karnataka, Kerala and Andhra Pradesh due to higher per capita consumption. Together they account for over 30% share of the total market revenue driven by wider acceptance of alcohol consumption as part of local culture and traditions. The western states like Maharashtra and Gujarat are also major contributors due to growing urbanization and disposable incomes particularly in cities like Mumbai and Ahmedabad.
The northeastern region bordering countries like Nepal, Bhutan and Bangladesh has emerged as one of the fastest growing markets over the past few years. Higher excise duties and import taxes in the neighboring countries make alcohol relatively cheaper in the Indian northeast states, thereby driving smuggling rackets as well as domestic demand. Improving infrastructure and connectivity along with rising tourist traffic have also propelled growth amid abundant natural resources and diverse landscape offering new opportunities. However, the COVID-19 impact on tourism and cross-border movement has temporarily slowed the pace.
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