Major Indian alcoholic beverages companies are likely to report revenue expansion of 8-10% in FY2025, led by steady demand for beer and increasing consumer preference for premium products, data indicates. With good monsoons, macroeconomic stability, and festive season this quarter, the alcobev sector is poised to show growth compared to the first six months and last year.
According to ICRA, during Q1FY25, the spirits industry reported around a 9 per cent YoY increase in revenues, supported by a 5-7 per cent improvement in realisations, while volumes grew by 2-4 per cent. The beer industry witnessed a higher revenue growth of 12 per cent in Q1FY25 owing to 3-5 per cent increase in volumes and around 7-9 per cent in realisations.
Its sample set of alcobev companies include Associated Alcohols & Breweries Limited (AABL), GM Breweries Limited, Mohan Meakin, Radico Khaitan, Som Distilleries & Breweries, Tilaknagar Industries, United Breweries Limited and United Spirits Limited.
Kinjal Shah, Senior Vice President and Co-Group Head – Corporate Ratings, ICRA, said, “the alcobev industry volume growth might improve to 5-6 per cent in FY2025 from around 4 per cent in FY2024. Spirits consumption had contracted by around 3 per cent YoY in FY2024 due to the rise in prices due to substantially higher taxes levied by some state governments, inflation, and increasing consumer preference towards premium products, which had impacted volumes to a certain extent. ICRA expects spirits volumes to grow at a moderate pace of 2-4 per cent in FY2025 supported by a limited increase in taxes anticipated for the year. Beer witnessed higher consumption growth than spirits in FY2024 with a YoY growth of around 8 per cent. This was supported by stable demand and higher increases in taxes on spirits in some states. ICRA expects moderate growth of 5-7 per cent for beer volumes in FY2025, on a high base”.
According to the International Spirits and Wines Association of India (ISWAI), the Indian alcohol beverage sector is valued at $52.4 billion. In FY21, it accounted for nearly 2 per cent of the nation’s GDP.
The sector is a critical economic driver, with an estimated domestic volume of 390 million cases of branded spirits and an excise revenue contribution of ₹3.4 lakh crores. From 2019 to 2023, while the total spirits industry grew at a CAGR of 2.6 per cent, the premium segment witnessed double-digit expansion, with the share of premium spirits rising from 42 per cent to 49 per cent.
The Indian Alcobev industry, directly and indirectly, employs over 7.9 million individuals, said ISWAI, whose members include Bacardi, Brown Forman, Campari Group, Diageo-United Spirits, John Distilleries, Moet Hennessy, Pernod Ricard, Suntory Global, and William Grant & Sons.
Sanjit Padhi, CEO of ISWAI, said, “The recent policy change in Andhra Pradesh, allowing private retail players to operate, marks a significant development in the industry’s growth. This shift will expand brand choices to the consumer, offering both domestic and international quality alcoholic beverages. Additionally, the digitisation of payments will also ensure transparent revenue flow to the government.”
He added that the alcobev industry plays a major role in the F&B sector with on-premise sales of alcoholic beverages through hotels, restaurants, bars, clubs, and other such establishments comprising a large share of the revenue generation for the industry. For restaurants alone, about 14 per cent to 19 per cent of the total revenues come from alcoholic beverages. Approximately 23-28 per cent of individuals employed in the organised F&B industry are from the Alcobev industry.
“The economic impact of alcohol-included tourism encompasses direct, indirect, and induced spending by tourists. The induced effect arises from the income generated by locals, including wages, salaries, profit, rent, and interest, which are linked to tourism. While direct alcohol tourism is still in its early stages and has the potential to boost local GDP by up to 20 per cent, certain states like Maharashtra, Karnataka, and Goa, have been able to leverage the industry for tourist influx,” Padhi explained.
Alongside, the upcoming festive season will only contribute to this growth. Anant S Iyer, Director General of Confederation of Indian Alcoholic Beverage Companies (CIABC), said, “Typically, companies tend to have special festive packaging on offer during the festive period commencing from Diwali to New Year. This is the peak season for alcobev products. At the retail level, companies may take up special visibility drives within the ambit of excise guidelines on permitting the same. It differs from state to state.”
He said that across the board, for all stakeholders -- state excise/ companies/ wholesalers/ retailers/ F&B outlets with bar licences - this is the peak three months to maximise sales and revenue. Alongside, companies tend to plan new launches and relaunches during this period with special or limited editions, especially in the higher price offerings across wines/spirits.
“One trend is the development of Premium Outlets which gives the consumer a look and feel of duty-free shopping at airports. These self-service and walk-through outlets are already in metros/key tier-I towns in states such as Haryana, Punjab, Karnataka, Maharashtra, Telangana, Odisha, Uttar Pradesh, West Bengal, Goa, Chandigarh. Another key trend is the offerings in the premium and above categories in wines and spirits from domestically owned Indian companies. Prices of such offerings range from ₹1,500 to ₹15,000 per bottle,” Iyer said.