INDIA ALCOHOL MARKET ANALYSIS
The India alcohol market is estimated to be valued at USD 55.81 Bn in 2024 and is expected to reach USD 92.57 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 7.5% from 2024 to 2031.
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The India alcohol market has been witnessing significant growth over the past few years. Factors such as rising disposable incomes, changing lifestyle, and social drinking habits have been driving the market growth. While the consumption of beer and spirits has increased substantially, India made foreign liquor (IMFL) continues to dominate the market. However, there is a rising popularity of the craft beer and premium whisky segments. The growing acceptance of women drinking alcohol particularly in urban areas is another factor that will support the market expansion in the coming years. Overall, increasing spending power and shifting trends towards western drinking culture make the India alcohol market an attractive space for investments.
Rise in income levels and increase in discretionary spending
With India's economy growing at a rapid pace over the past decade, personal incomes have risen substantially. According to recent estimates, the average annual household income in India increased from around US$1,100 in 2010 to nearly US$1,800 in 2020. This rise has been fueled by robust job creation in sunrise industries and service sectors. As incomes increased, so has the amount of discretionary spending power with individuals. Alcohol happens to be one of those luxury/leisure goods whose demand increases along with the rise in discretionary incomes. Young urban Indias today have more exposure to global lifestyle and are willing to spend on premium alcoholic drinks when dining out or socializing with friends. They see alcohol consumption as a sign of social status. Alcohol manufacturers have cleverly targeted this segment through innovative products, premium branding, and attractive packaging. Aggressive marketing campaigns on digital platforms have also increased visibility. Overall, the growing middle-class population with higher spending power has enhanced the addressable market for premium alcohol brands. However, much of the increased income is still being spent in the lower-priced alcohol segment as well which also aids the overall category growth.
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Changing social norms and evolving attitudes
Society and culture play a big role in shaping consumption behaviors. India society is known to have deep-rooted conservative views when it comes to alcohol consumption historically. However, over the past decade, social attitudes have started evolving at a fast pace, especially in urban areas. Young Indias today have more exposure to global culture through easy access to media and internet. They are comfortable socializing over drinks and do not necessarily see alcohol as a vice anymore. Even in smaller towns and cities, people have become more open-minded about casual drinking. Changing mindsets have made alcohol more acceptable as a means of socialization, relaxation, and enjoyment rather than just inebriation. Alcohol companies promoting a moderate drinking lifestyle through their branding and responsible consumption campaigns have also helped mold positive social perceptions. Greater social acceptability of alcohol coupled with consumers' desire to socialize more freely is working in favor of the market.
Key Takeaways from Analyst
The India alcohol market continues to demonstrate strong growth potential driven by increasing disposable incomes and consumption among younger demographics. However, stringent regulations and socio-cultural factors still restrain the market in many parts of the country. The growing culture of social drinking and vibrant nightlife in urban centers provide opportunities to introduce premium and innovative products.
Rural consumption is expected to see a gradual increase as development reaches tier 2 and 3 cities with rising economic opportunities. Furthermore, easing restrictions on foreign investment and partnership with local players may help international spirits and beer companies expand their footprint in India.
Online alcohol sales also emerge as a promising avenue to address the distribution challenges in India’s vast geography through seamless digital interfaces.
Market Challenges: Stringent government regulations
Stringent government regulations have significantly restrained the growth of the alcohol market in India in recent years. The various state governments across India have implemented strict laws governing the production, distribution, pricing and availability of alcoholic beverages. Some key regulations that are limiting market expansion include restrictions on the number of retail liquor shops that can operate, regulatory controls over pricing and taxes, and bans or limitations on advertising and promotion of alcohol products. The regulations have made it very difficult for companies to explore new market opportunities and grow their business organically. Restrictions over retail availability mean that companies cannot open new shops or franchise their existing retail networks even in areas where there is rising demand. Caps on retail prices combined with high taxes have squeezed company margins and profitability. The advertising bans prevent brands from effectively promoting themselves and competing for market share. Companies are left with limited options to creatively market and raise awareness about their products among legal-age consumers.
Market Opportunities: Premiumization/craft alcohol market growth
The Indian alcohol market has seen significant changes over the past few years with the rising popularity of premium and craft alcohol. Consumers are increasingly seeking unique drinking experiences and are willing to pay more for higher quality drinks that are produced using traditional or novel methods. This premiumization trend provides excellent opportunities for growth in the Indian market. More Indian consumers, especially millennials and Gen Z, are exploring craft beers, wines, spirits and cocktails. They want artisanal products that have an interesting story and flavor profile. Traditional liquors like fenny and daru are also seeing renewed interest from urban populations who want to experiment with indigenous drinks. Several small craft brands have emerged who are handcrafting unique products using organic ingredients, innovative recipes, or reviving legacy techniques. For example, breweries in certain northeastern states are infusing beers with indigenous herbs and spices. Similarly, distilleries in Maharashtra, Goa and Sikkim are crafting novel single malts, gins and organic country liquors.
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Insights, by Beverage Type: Rising Disposable Incomes and Young Adult Population
In terms of beverage type, spirits (whisky, vodka, rum, gin, etc.) is expected to contribute 34.6% share of the market in 2024, owing to a growing preference for premiumization among young India adults. As disposable incomes in the country continue rising, more consumers - especially those in metropolitan areas - are willing to spend extra on higher quality spirits over other beverages. Beer and wine remain niche in India compared to spirits due to cultural preferences as well as limited availability in many areas until recently. For instance, The average age of the India population is reducing significantly, with over 60% now under the age of 35. This young population has grown up with increasing exposure to global mixology trends through social media and travel. They are fueling the demand for premium international spirit brands and cocktails served at bars and restaurants in major cities. Products like premium Scotch whisky and American/European vodka are in high demand due to their perceived status value. Local craft distilleries are also emerging to tap into this growing consumer base interested in unique tasting experiences. Brands are targeting younger India drinkers through innovative packaging, flavor extensions, and savvy digital marketing campaigns. Ready-to-drink cocktail mixes and premixed spirits are gaining ground due to their convenience. The experimentation with different flavors also allows consumers to sample a variety of products without committing to an entire bottle, thus driving higher volumes overall. As India society continues to modernize at a rapid pace, the trend of premiumization in spirits is expected to persist well into the future.
Insights, by Price Point: Accessible Pricing For Mass Consumption
When considering price point, the mid-range segment is expected to contribute 39.8% share to the India alcohol market in 2024, primarily due to its accessible price levels for mass consumption. Economy/value brands dominate bottled beer sales and some hard liquor categories as well. However, mid-range brands achieve the sweet spot of offering good quality at competitive price points that a wider consumer base can comfortably afford to buy regularly or for at-home socializing occasions. With average disposable incomes still moderate compared to developed markets, mid-range brands allow the bulk of consumers living in Tier 2/3 cities to indulge in alcohol without going over their budgets. These products serve as affordable social drinks that families and friends can share together during festivals and get-togethers. Due to their scale, mid-range companies are able to invest substantially in Pan-India distribution networks spanning urban and rural areas. Aggressive retail activation promotions are also run by these brands to stay top-of-mind amid fierce competition. Some blend premiumization into their portfolios through superior expressions at higher tiers to appeal to upwardly mobile customers as well. With over 70% of India still classified as middle or lower-income consumers, mid-range brands will maintain their stronghold.
Insights, by Distribution Channel: Evolving Shopping Experiences
Among distribution channel, supermarkets and hypermarkets lead the India alcohol market due to the growing modern retail landscape with 34.5% of the market share in 2024. Consumers today seek varied shopping experiences beyond traditional liquor stores, driving footfalls to air-conditioned hypermarkets that stock all product categories under one roof. Supermarkets command premium shelf space to showcase alcohol and have trained staff to assist with selections. Detailed category management and niche assortments tailored for local demographics help drive impulse purchases. Special seasonal features and festivals are celebrated in-store through limited edition SKUs and tastings. Easy online ordering and delivery options integrated by major retailers add further convenience for busy consumers. Monetizing loyal customers through loyalty programs and private labels is also a strategy. Meanwhile, smaller grocery and convenience stores form partnerships with supermarkets to gain access to supply chain and marketing resources required to keep pace in this evolving industry. And as e-commerce gains steam across India, delivery-only online platforms are bridging the last-mile access gap, especially for millennials who research and shop conveniently via websites and mobile apps. With rising supermarket penetration into new markets and omni-channel expansion, this channel looks set to further expand its market dominance.
*Definition: The India alcohol market is a large and growing consumer market for alcoholic beverages within India. It includes the production, distribution, and sale of various spirits, beer, wines and others within the country. Major products in the market are whisky, rum, India Made Foreign Liquor, beer, and locally produced spirits. Key players in the industry are United Spirits, Radico Khaitan, Pernod Ricard, and Diageo that manufacture, distribute, and market their alcohol brands across India.
India Alcohol Market Report Coverage
| Report Coverage | Details | ||
|---|---|---|---|
| Base Year: | 2023 | Market Size in 2024: | US$ 55.81 Bn |
| Historical Data for: | 2019 To 2023 | Forecast Period: | 2024 To 2031 |
| Forecast Period 2024 to 2031 CAGR: | 7.5% | 2031 Value Projection: | US$ 92.57 Bn |
| Geographies covered: |
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| Segments covered: |
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| Companies covered: |
United Spirits Limited, Tilaknagar Industries Ltd, United Breweries Limited, Jagatjit Industries, Mohan Meakin, Globus Spirits, Allied Blenders and Distillers Pvt., SAB Millier, Radico Khaitan Limited, Khemani Group, SOM Distilleries and Breweries, Carlsberg A/S, Som Distilleries And Breweries Limited, Khoday India, Amrut Distilleries, Amber Distilleries Limited, Carlsberg India, Raj Innotech, Anheuser-Bush InBev SA/NV, and White Rhino Brewing Co. |
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*Definition: The India alcohol market is a large and growing consumer market for alcoholic beverages within India. It includes the production, distribution, and sale of various spirits, beer, wines and others within the country. Major products in the market are whisky, rum, India Made Foreign Liquor, beer, and locally produced spirits. Key players in the industry are United Spirits, Radico Khaitan, Pernod Ricard, and Diageo that manufacture, distribute, and market their alcohol brands across India.
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About Author
Sakshi Suryawanshi is a Research Consultant with 6 years of extensive experience in market research and consulting. She is proficient in market estimation, competitive analysis, and patent analysis. Sakshi excels in identifying market trends and evaluating competitive landscapes to provide actionable insights that drive strategic decision-making. Her expertise helps businesses navigate complex market dynamics and achieve their objectives effectively.
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