The Indian spirits market prepares for a varied landscape in 2024, with smaller companies potentially shining brightly.
20-April-2024 | 651 Views | 1 Min Read
NEW DELHI: After navigating a challenging year marked by tax increases, state elections, and policy changes in 2023, the Indian spirits market is projected to experience stagnant growth in 2024.
As major players gravitate towards the premium segment, smaller regional companies are positioned to seize the spotlight with accelerated growth surpassing their larger competitors.
The effects of challenges faced in 2023 may linger, exacerbated by significant tax hikes in states such as Karnataka and the dampening impact of elections across nine states.
Despite experiencing an initial surge in Punjab following the implementation of a new excise policy, the market has since reached a plateau. The full impact of the festive season is yet to be realised, with analysts predicting a modest 5-6% growth.
Smaller brands have the potential to cultivate growth, while larger companies may prioritise “value up-trading” and promoting premium offerings. The spotlight is anticipated to be on smaller regional players, according to spirits consultancy IWSR. They forecast a 4% volume growth for the entire segment, surpassing the global growth rate of 1%.
The Indian beer and wine markets are projected to experience growth rates of 3% and 10%, respectively, until 2027. Factors such as affordability, enhanced retail experiences, and a rise in experimentation with new products are instilling cautious optimism within the market.
Jason Holway, senior market analyst at drinks consultancy IWSR, suggests that the increasing comfort of younger consumers in public drinking spaces could serve as a significant factor contributing to growth. According to IWSR figures from 2022, spirits volumes increased by 2%, beer saw a rise of 38%, RTDs surged by 40%, and wine increased by 19%. In each case, the value grew faster than the volume.
Smaller companies remain relevant in the industry. Vinod Giri, Director General of industry body Confederation of Indian Alcoholic Beverage Companies (CIABC), emphasised that growth projections should take into account the contributions of smaller and newer players. These players are anticipated to play a significant role in 2024.
“In 2022, the industry experienced significant sales growth of 14%, leading to a natural slowdown in 2023,” he explained. Moreover, significant tax hikes and price increases in critical markets such as Karnataka, along with elections in nine states, have caused disruptions in the market.Considering these factors, we anticipate the market to grow by approximately 5-6% this year. Of course, much depends on the outcome of the current festive season,” he added.
“Smaller regional players are perceived as a significant driving force behind this growth,” Giri suggests. He estimates that mid-sized and smaller companies will experience a 5-6% growth over the next five years, primarily propelled by these players.
As an illustration, NeuWorld Spirits, a company based in New Delhi and established in 2022, anticipates growth in its premium spirits lineup. Owned by the TRDP Group, which also produces Mario biscuits and Raj Niwas pan masala, the company’s managing director, Poonam Chandel, expects that in the upcoming fiscal year FY25, its premium spirits portfolio, including IMFL whisky, rum, and vodka, should achieve an average growth rate of around 25-30%.
Although India’s spirit consumption falls short of global averages, it stands as the largest consumer of brown spirits such as whisky. Rising incomes, heightened awareness, and a wide array of new product options are driving a shift in consumer preferences.
“The industry has the potential to offer more, and consumers are eager for more as well. This increasing desire for experimentation could lead to a promising future for the Indian spirits market, surpassing the projected stagnation of 2024,” remarked Giri.
