Monday, July 15, 2024

Alcoholic Beverages Sector Sees Surge; Tilaknagar Up 14%; USL Hits Record High

India is poised to become a significant player in the AlcoBev market, ranking fifth in revenue contribution in the near future.

Shares of alcoholic beverages (AlcoBev) companies witnessed a surge, climbing by up to 14 per cent on the BSE during Wednesday’s trading session, buoyed by substantial trading volumes and positive business prospects.

In India, the per capita consumption of alcohol is forecasted to rise gradually, with an estimated increase of 0.1 litres (a 2 per cent uptick) from 2024 to 2029. By 2029, per capita consumption is anticipated to reach a new peak of 5.06 litres.

Several factors are propelling this growth, including higher incomes, urbanization, increased availability of alcoholic beverages, and a trend towards premium products. Additionally, younger consumers are contributing significantly to market expansion. This growth is further bolstered by demographic shifts, a growing middle class, and increasingly favorable government policies towards the sector.

Tilaknagar Industries (TI), the fourth-largest Indian-made foreign liquor (IMFL) player, witnessed a 14 per cent surge in stock to Rs 250. TI is renowned for producing India’s top-selling premium brandy, Mansion House Brandy, and offers a diverse portfolio comprising over 15 brands of brandy, whisky, gin, rum, and vodka. TI’s brandy labels predominantly dominate the Prestige & Above (P&A) segments.

Brandy holds the second-largest market share within IMFL, accounting for over 20 per cent of the industry by volume. Moreover, the premium Brandy segment in India is expected to continue gaining market share within the overall P&A IMFL segment.

Radico Khaitan surged by 10 per cent to Rs 1,724 on the BSE during intra-day trading, while United Spirits (USL) reached a record high of Rs 1,305, marking an 8 per cent rally. USL surpassed its previous high of Rs 1,245.15 recorded on May 8, 2024.

USL has projected back-ended growth in FY25, anticipating robust growth in H2 (October to March) after potentially muted volumes in H1 (April to September) due to a high base from the previous year and a subdued demand environment. The company continues to invest in a diversified portfolio, focusing on innovations like Godawan single malt, Don Julio, and McDowell’s single malt whisky, as highlighted by analysts at Elara Capital.

Sula Vineyards and United Breweries also saw significant gains, rising by 7 per cent each to Rs 516.15 and Rs 2,069.30, respectively.

On a global scale, India is poised to become the fifth-largest contributor to the AlcoBev market’s revenues in the near to medium term. This growth reflects a broader trend where emerging markets exert increasing influence on global economic dynamics. Sula Vineyards, in its FY24 annual report, emphasized that India’s AlcoBev sector not only underscores the country’s growing global influence but also highlights the economic opportunities arising from its internal market dynamics and demographic advantages.

The AlcoBev industry in India is forecasted to witness substantial growth, reaching a market size of $64 billion by 2030, up from $52.4 billion in 2021, with an annual growth rate of 6.54 per cent between 2023 and 2027. By 2034, the market is anticipated to grow to approximately $112 billion from an estimated $55 billion in 2024, representing a 7.2 per cent compound annual growth rate (CAGR). This growth trajectory is underpinned by demographic shifts, evolving consumer lifestyles, and changing cultural perceptions regarding alcohol consumption.

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