Sector Trend Analysis – Beer, wine and spirits in India

Overview

Alcohol sales in India took a significant hit due to the COVID-19 pandemic, but have since recovered to pre-pandemic numbers. The Indian alcohol market is dominated by spirits and beer, while wine is very marginal, but is growing quickly. Apple and pear ciders are not significant in the Indian market.

Consumption of alcoholic beverages was affected by the COVID-19 pandemic, primarily due to reductions in on-trade sales (that is, restaurants, hotels and bars). Off-trade sales were steady during the pandemic, and as such off-sales for beer, wine and spirits all posted positive sales growth from 2017 to 2022. Spirits were the most insulated product category, because spirits are favoured for off-sale consumption relative to wine and beer.

Alcohol use in India is highly dependent on demographic characteristics. Men are much more likely to consume alcohol than women. Alcohol users tend to be older and lower-income. Members of certain religious groups are more likely to consume alcohol than others due to cultural and religious norms.

Climate can drive alcoholic beverage sales: an early, hot summer in 2022 was credited with boosting beer sales, which were 30.5% higher in 2022 than in 2021.

India is a federal country where states have high levels of legal autonomy. India's 36 states and union territories each have their own taxation structures and legal drinking ages^{Footnote 1}. Drinking ages range from as low as 18 years in states such as Goa, Rajasthan and Himchal Pradesh to as high as 25 years in Punjab, Haryana and Maharashtra. In most (25) of India's states and territories, the legal drinking age is 21. States can set their own tax rates. Some have raised taxes and prices in response to higher inflation, while others have been reluctant to do so. Companies rely on their well-developed local distribution networks, and some international companies have divested their businesses to local partners. For example, MolsonCoors has sold its beer business in India to Inbrew.

Tastes are evolving in India. Whiskey is still the dominant spirit category in India, but gin is increasingly popular, and the number of domestic premium Indian gin brands is increasing. Gin is benefitting from the increased popularity of cocktails and mixology, and perceptions have shifted from negative to positive. The coastal state of Goa, which is an important tourist destination, is the hub of India's craft gin industry^{Footnote 1}.

Market characteristics

Alcoholic beverage sales in India fell significantly during the pandemic, driven by a large drop in beer and spirits sales in 2020. Beer sales did not recover until 2022, while spirits sales recovered by the end of 2021.

Besides cider, which does not have any significant sales in India, wine is the least popular alcoholic beverage in India. Wine grew at a steady pace from 2017 to 2022, with 6.4% CAGR over this period, the highest among all categories. Sales dipped slightly during the pandemic, but have since recovered.

RTDs have the highest forecast growth rate over the 2022 to 2027 period, followed by wine. Beer is forecast to continue its recovery and will thus close the gap with spirits.

On-trade fell during the pandemic, registering an overall decline of −2.2% CAGR from 2017 to 2022. Recovery in 2022 was only partial. The growth of alcohol sales over the 2017 to 2022 period was entirely driven by off-trade volume.

On-trade volume is forecast to grow at a faster rate than off-trade volume through 2027, at 8.1% CAGR for on-trade compared to 5.9% CAGR for off-trade. Nonetheless, on-trade volume will not close the gap with off-trade volume.

In general, alcohol sales in India are low on a per capita basis: beer consumption amounted to just over 2 litres per person in 2022, which is one-tenth the average rate in the Asia-Pacific region. Consumers tend to be younger, with older customers looking to reduce their alcohol intake^{Footnote 1}. Women in India are much less likely to consume alcohol than men, and consumption varies significantly by religion and region. Balasubramani et al. (2021) ran a country-wide epidemiological survey of India in 2015-2016. The authors found that 29.2% of Indian men consume alcohol, compared to only 1.2% of women. The highest rates of alcohol consumption are found in southern and northeastern India, where just over 40% of men consume alcohol. Northeastern India is also the region where women are most likely to consume alcohol, at 6.9%. In southern India, only 1.8% of women consume alcohol, slightly above the national average. Consumption is lowest in western India, where 17% of men and a mere 0.3% of women consume alcohol^{Footnote 2}.

Alcohol consumption for both men and women is highest among Christians, at 42.8% and 4.8% for men and women, respectively. Due to religious prohibitions, Muslims have the lowest level of alcohol consumption, at 11.3% for men and 0.1% for women. Among the majority Hindu population, 31.6% of men and 1.3% of women consumed alcohol^{Footnote 2}.

Alcohol consumption is decreasing in income and education level for both men and women. There is no significant urban/rural split in terms of alcohol consumption. Tobacco users tend to be more likely to use alcohol, and this is true for both men and women^{Footnote 2}.

Heineken became a major player in the Indian market in 2021 through its acquisition of the Kingfisher beer brand. Many of the most popular spirits brands in India are whiskies.

Wine in India

Wine sales in India are low but increasing, driven primarily by fortified wine and vermouth. Red and white wine sales dipped during the pandemic, but have since recovered to pre-pandemic levels. Red wine is significantly more popular than white wine, and this gap will be maintained through 2027. Rosé wine, saké and non-alcoholic wine are not popular in India.

Due to the pandemic, on-trade wine sales dipped by one-third from 2019 to 2020, and continued to fall through 2021. Slight recovery started in 2022, but the gap between off-trade and on-trade volumes will persist through 2027.

There were a total of nine wine companies with notable market shares in India in 2022. The most important player, Samant Soma Wines, accounts for 34.2% of total sales by volume. A total of 33.7% of wine shares by volume were outside the top nine in 2022.

In terms of brands, the wine market is relatively more segmented, with brands outside of the top 10 accounting for 60% of sales in 2022 by volume. Samant Soma's company market share is the reason why it accounts for three of the brands in the top 10.

Beer in India

Dark beer, stouts and non-alcoholic beer are not sold in significant quantities in India. Only lagers saw significant sales. Most sales were in the premium market tier. Mid-priced lagers represented about one fifth of the market in 2022. Economy lagers are not sold in India.

As is the case for wine and spirits, the pandemic impacted beer sales in restaurants. Off-trade volumes increased by 4.7% CAGR from 2017 to 2022, while on-trade volumes decreased by −2.2% CAGR.

The Indian beer market is consolidated, but it is not becoming noticeably more consolidated. Rather, Heineken NV acquired UB Group's entire market share when it took majority ownership of UB Group in 2021^{Footnote 3}. As such, Kingfisher is now considered a Heineken brand, as is UB Export. Kingfisher is the most popular beer brand in India, representing 47.3% of the market in 2022.

Spirits in India

Whiskies are the most popular spirits in India, representing 64.0% of the market in 2022. Liqueurs are not particularly popular, but have grown very quickly over the 2017 to 2022 period, with 47.9% CAGR over the period. The forecast is positive, at 41.2% CAGR through 2027. Liqueur sales are expected to reach 4.8 million litres in 2027.

Brandy, rum and white spirits (that is, vodka and gin) are all more popular than wine in India. All three categories were negatively impacted by the pandemic, but sales have since recovered to pre-pandemic levels. Through 2027, rum and white spirits sales are expected to outpace the overall spirits sector, with forecast growth of 7.8% and 7.9% CAGR, respectively.

On-trade fell during the pandemic, as was the case for wine and beer. Recovery is expected through 2027, but the gap between off-trade and on-trade will remain substantial.

Seven of the ten most popular spirits brands in India are whiskies. Most are Indian whiskies and the remainder are Scotches. Old Monk is a domestic rum brand, while Mansion House is a domestic French-style brandy. McDowell's, the most popular spirits brand in India overall, is used to market whiskey, brandy and rum.

Analysis of imports and exports

India is a net importer of spirits, with a trade deficit of CAD$ 1.1 billion in 2023. Imports have grown faster than exports, with 15.7% CAGR for imports from 2018 to 2023 and 4.4% CAGR for exports over the same period. India's leading imports are spirits and liqueurs, wine and grain alcohol. India's leading exports are spirits and liqueurs, grain alcohol and beer.

Canada has a trade surplus with India for beer, wine and spirits, although the total amount of bilateral trade between the two countries is very small, being worth less than CAD$ 2 million in 2023. India's principal import from Canada is grain alcohol, which accounted for 92.7% of the total value of imports from Canada. Spirits and liquor were India's main export to Canada, accounting for 82.8% of the total value of exports in 2023. The remainder of exports in 2023 were beer.

New product launches

According to data from the Mintel Global New Products Database, 783 new or repackaged alcoholic beverage products were launched in India from 2019 to 2023. Whiskey launches accounted for 34.2% of launches over this period, and beer accounted for 23.9% of the total.

Many of the new alcoholic bevegrage products launched in India over the last five years could be classified as high-end: a quarter (27.3%) of all products launched in 2023 were priced as US $24.80 or more. Most (53.2%) of the launches in 2023 were for new products. There were only two relaunches in 2023, and no new formulations.

Vegetarian claims were extremely common. This is a feature of Indian food product packaging standards, where a vegetarian green dot will be automatically added to conformant products.

Examples of new product launches

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Resources

• Euromonitor International, Passport statistics, 2024
• Global Trade Tracker, 2024
• Mintel Global New Products Database, 2024
• Euromonitor International, Alcoholic Drinks in India – Analysis, October 2023
• Sahu, Ram Prasad and Dev Chatterjee. Heineken buys Mallya's 15% stake to take control of United Breweries. June 24, 2021. Business Standard, Mumbai.
• Balasubramani, Karuppusamy and Winnie Paulson, Savitha Chellappan, Ramakrishnan Ramachandran, Sujit Kumar Behera and Praveen Balabaskaran Nina. Epidemiology, Hot Spots, and Sociodemographic Risk Factors of Alcohol Consumption in Indian Men and Women: Analysis of National Family Health Survey-4 (2015-16), a Nationally Representative Cross-Sectional Study. August 27, 2021. Frointiers in Public Health.

Sector Trend Analysis – Beer, wine and spirits in India
Global Analysis Report

Prepared by: Alexandre Holm Perrault, Market Analyst

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