Artisanal mixers, high on flavour and low in calories, are the new favourite ‘drinking buddies’ of millennials and GenZs who love to throw house parties with cocktail bar vibes.
Prepared using natural ingredients, while cutting back on processed sugar and artificial preservatives, they are increasingly making their way into cocktail glasses in place of sugary soft drinks, juices and sodas.
A shift in consumption behaviour is driving the demand for cocktail mixers in India, says Vikram Damodaran, Chief Innovation Officer of alcoholic beverage company Diageo India.
“Of late, people are becoming more mindful of their drinking choices. This has led to a growing demand for premium craft spirits and low- or zero-alcohol alternatives. Brands are innovating to deliver more high-quality non-alcoholic variants that offer the same complexity and flavour as traditional spirits,” he says.
According to market research firm DataM Intelligence, the global market for cocktail mixers is projected to grow from $9.1 billion in 2022 to $17 billion by 2030. Research firm Benori Knowledge had forecast a compounded annual growth rate of 15.1 per cent during 2022-28 for the global ready-to-drink (RTD) cocktail market and 10.3 per cent during 2021-26 for the Indian market.
Funding flow
Since 2018, the cocktail mixer manufacturing segment has received nearly $13 million funding, according to market intelligence platform Tracxn. Funding peaked at $4.9 million in 2019 before moderating to $1.5 million in 2023.
Alcoholic beverage, or alcobev, manufacturers have launched their lines of cocktail mixers and other carbonated drinks primarily to escape restrictions on alcohol advertising.
On the other hand, startups such as Jimmy’s Cocktail, Sepoy & Co, Swizzle, and Mossant are focusing on crafting quality tonic waters, mocktails, and cocktail mixers with unique flavours.
Launched in 2018, Sepoy & Co manufactures a range of tonic waters, ginger ales, and lemonades at its facility in Uttarakhand. It imported the equipment from European manufacturers specialising in beverage technology.
“Five years ago, this segment was almost non-existent. However, the rise of premium spirits and the availability of premium mixers have driven growth in consumer demand,” says its founder, Angad Soni.
At the other end, Jimmy’s Cocktail is an early-stage startup with asset-light operations. “We have an exclusive arrangement with a plant in Nasik where only Jimmy’s products are made,” says its founder, Ankur Bhatia.
The company plans to expand beyond cocktail mixtures to manufacturing non-alcoholic beer, zero-sugar sparkling drinks, and ready-to-drink lemonades and fruit juice-based beverages.
Speed delivery
The rapid expansion of quick commerce platforms has widened the market for mixers by enabling easy access to the products, company founders says.
Bootstrapped Sepoy & Co says 40 per cent of its sales come from quick commerce, 10 per cent from online, and 50 per cent from offline channels.
It also exports the mixers to the UK, Singapore, Italy, Dubai, UAE, and the Maldives.
Jimmy’s Cocktail is available in over 50 cities, across nearly 20,000 outlets; q-comm accounts for 25 per cent of sales.
Ready-to-drink mocktail maker Swizzle is available in more than 1,000 outlets, including 750 vending machines in eight Tier-1 cities and more than 400 hotels and restaurants in Bengaluru.
“A few weeks down the line, we will also be present on a quick commerce platform via Big Basket,” says co-founder Vrinda Singhal.
The company manufactures its ‘flavour’ — fruit extraction — at its facility in Bengaluru, while a third party handles the canning and bottling.
With a daily production capacity of 250-300 litres, it sells nearly 30,000 cans a month and targets venturing into Singapore, Malaysia, Indonesia, Vietnam next year.
Mossant Fermentary, which makes tonic waters and craft kombuchas, began by producing around 5,000 bottles a month in a 500 sq ft space in Bengaluru back in 2019. “In October 2022, when we moved to a new 3,000 sq ft facility, our target was to multiply the output 10-15 times. We’ve kind of achieved that and are looking to expand to an even larger facility,” says Shishir Sathyan, a co-founder of the bootstrapped and profitable company.
Tax conundrums
While cocktail mixers may not have the same market sweep as alcoholic beverages, they do enjoy a few other advantages.
“Brewers are envious that we don’t have to deal with excise duty. Effort goes into ensuring a fermented product stays below the 0.5 per cent ABV (alcohol by volume),” says Sathyan. Concurring with this, Swizzle’s Singhal says the category is subject to a more liberal tax structure, devoid of State-wise regulations.
The mixers startups, however, point to their struggle in turning profitable.
In a market where consumers are used to beverages priced ₹10-20, balancing costs while delivering quality is tough, says Bhatia of Jimmy’s Cocktail.
Yet another challenge is the 40 per cent tax levied on ready-to-drink cocktails and mixers as they are clubbed with soft drinks (carbonated drinks with added sweeteners), says Soni of Sepoy & Co.
Despite the drawbacks, Edwin Daniel, founding partner of Optimistic Capital, remains confident about the long-term potential of the sector.
“As consumers continue seeking healthier alternatives, there is room for growth, especially for companies that can innovate product offerings, expand distribution networks, and enhance brand loyalty. Investors may return once companies demonstrate these capabilities,” he says.