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Sunday, May 26, 2024
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Spurt in social gatherings post-Covid is boosting alcohol sales in India

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  • The Indian alcoholic beverages market is projected to grow at 11% per annum in value terms for the period between 2021 to 2025.
  • The alcohol and beverage industry in India is projected to cross 1200 million cases in volume by 2025.
  • India’s alcoholic beverages industry is having to deal with several obstacles – from tourists triggering pandemic scares to varying excise duties across the country.
  • Consumers are also switching from beer to whisky, rum, brandy and scotch on budgetary and health concerns.

A growing spurt in post-pandemic social gatherings and socialising is seeing an uptick in food and beverages consumption, boosting alcohol sales in India. Consumers are also switching from beer to brown liquor like whisky, rum, brandy and scotch on budgetary and health concerns, industry experts say.

“There has been a revenge buying going on in the market in the past 6 months. Many have shifted from beer to higher alcohol content products. Beer is comparatively more expensive as people tend to buy more of it due to less alcohol content,” said Ishwaraj Bhatia, COO of craft beer company Simba, which witnessed a 35% growth post-pandemic.

Indians have been getting out in droves to socialise in restaurants, clubs, pubs and bars – making up for all the lost social interactions after the Covid-19 pandemic’s forced isolation.

Bangalore-based Ironhill, which claims to be the world’s largest microbrewery, clocked an overall sales in excess of ₹150 crore in 2022 alone.

“The post pandemic era has been promising to us in many ways. Our sales have improved by steady dine-in footfalls across all our outlets. The consumption has been the highest in Bengaluru by a huge margin, followed by Vijayawada in Andhra Pradesh and outlets in Telangana and Andhra Pradesh,” said Teja Chekuri, Managing Partner of Ironhill India.

Dine-in business of quick service restaurants or QSRs saw a strong growth in Q1FY2023 according to a BNP Paribas sector report. That bodes well for alcohol consumption too.

According to a Mirae Asset QSR report 2022, pubs, clubs and bars comprise 27% of the sales share. Pubs and bars are expected to grow at a CAGR of 14.8% and 9.5% in FY25, Paribas said.

Indian alcohol beverage market is the third largest market in the world after China and USA by volume. This market is projected to grow at 11% per annum in value terms in 2021-2025, while by volume it is projected to cross 1200 million cases by
2025.

Changing excise policies a challenge

Even as the alcoholic beverages industry in India slowly gets back on the road to recovery, it is having to deal with several obstacles – from tourists triggering pandemic scares to varying excise duties across the country.

Delhi, a major market for alcoholic beverages, recently changed its excise policy. From September 1, Delhi and Ghaziabad went back to their old excise policies, leaving private players in the lurch. Private players were offering one plus one free alcohol to sell the remaining stock before the old excise policy came back.

“The old excise policy favoured the private players more than the government vendors. Label and registration fees have gone up 100 fold and marketing is restricted. For registering a label in Delhi, we have to pay ₹15 lakh per year. For us, Delhi has been very expensive from the beginning, “ said Simba’s Bhatia.

The entrepreneurs in the industry say Tier 1 cities were facing hiccups getting back on track due to the high inflow of travellers post pandemic leading to Covid cases. The tier 2 and tier 3 cities were quicker to adapt.

“It is more difficult to sell alcohol in India rather than abroad because every state is a different country with its own excise rules. We have a separate team just to monitor the rapid changes in excise rules across states in India. The southern region of India is especially difficult to tap into as it forms 40% of the beer sales,” said Bhatia.

Despite these issues, the Indian alcoholic beverage industry is expecting to grow robustly in the next few years and are looking to expand.

UK-based research agency IWSR Drinks market analysis says Indian spirits segments will grow 4.4% in the next five years while beer will grow 9.3%.

“We have been pushing our franchise model quite aggressively and have already begun talks for outlets in Maharashtra, Delhi, Punjab, Rajasthan among other states. We plan to have at least 30 outlets across India in the next few years,” said Ironhill India’s Chekuri.

The above news was originally posted on news.google.com

Aabkari Times Editorial Teamhttps://aabkaritimes.com
Aabkari Times is a monthly news magazine on Liquor, Excise and Alcohol allied industry; being published since 2009 by the expertise of retired excise dept. associates and alco-bev industry professionals as our editorial team. Our magazine contains different new alco-bev strategic and new brand launch articles as well as news on recent govt. policies, trends on alcohol industry and other important data relevant to the distilleries and industry at the mass.

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