Wine, beer and spirits in India

Note: This report includes forecasting data that is based on baseline historical data.

Executive summary

During the initial COVID-19 lockdown in India, which came into effect on March 25, 2020, alcoholic drinks, including wine, were deemed non-essential. The government banned the manufacture and sale of those products through both on- and off-trade channels during the lockdown. While the impact on sales was significant, this situation could have been worse had wineries not been able to harvest and crush grapes during the February/March harvest season. As grapes fall under agriculture produce, wineries were permitted to crush excess table grapes for their low-end wine ranges. Without this exemption, farmers would have had no other option than to let their grapes turn into raisins. Nevertheless, given the temporary ban on wine sales coupled with the huge disruption of on-trade outlets, many of which were forced to close for almost half the year, the total volume of wine sales still recorded heavy losses.

Unlike many other alcoholic drinks, beer has a limited shelf life, so breweries had to write off some stock, which impacted their bottom line. Additionally, on-trade outlets had to dispose of unsold beer as it is unhygienic to sell beer which has sat unused for as long as five and a half months. March and April are normally a peak sales period for beer, which means the timing of the lockdown and the ban on sales was especially poor.

Premium and super premium spirits were the hardest hit during the initial lockdown because these products typically rely on social events for sales, while they also suffered from the closure of bars for almost half the year. Imported spirits brands were particularly hard hit, as they generally have a stronger reliance on on-trade sales.

 

Wine in India

Sales increased at a CAGR of 6.1% from 2016 to 2020, reaching 31.1 million litres in 2020.

Other fortified wine was the most dynamic category in 2020, growing at a CAGR of 13.6% from 2016 to 2020.

Over the forecast period, wine is projected to increase at a 11.3% total volume CAGR to reach 52.2 million litres in 2025

Wine consumed in millions of litres in India, 2016-2025, historical and forecast
Category 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Wine 24.5 31.1 6.1 34.0 52.2 11,3
Fortified Wine and Vermouth 7.8 13.0 13.6 14.7 24.6 13.7
Other Fortified Wine 7.8 13.0 13.6 14.7 24.6 13.7
Sparkling Wine 0.8 1.0 5.7 1.1 1.9 14.6
Champagne 0.3 0.3 0.0 0.3 0.5 13.6
Other Sparkling Wine 0.5 0.7 8.8 0.8 1.4 15.0
Still Light Grape Wine 16.0 17.1 1.7 18.2 25.7 9.0
Still Red Wine 12.8 13.7 1.7 14.7 20.5 8.7
Still White Wine 3.2 3.4 1.5 3.5 5.2 10.4

Source: Euromonitor 2022

*CAGR: Compound Annual Growth Rate

2020 impact

A bad year for wine as COVID-19 put the squeeze on sales

During the initial COVID-19 lockdown in India, alcoholic drinks, including wine, were deemed non-essential. The government banned the manufacture and sale of those products during the lockdown through both on- and off-trade channels. While the impact on sales was significant, this situation could have been worse had wineries not been able to harvest and crush grapes during the February/March harvest season. As grapes fall under agriculture produce, wineries were permitted to crush excess table grapes for their low-end wine ranges. Without this exemption, farmers would have had no other option than to let their grapes turn into raisins. Nevertheless, given the temporary ban on sales of wine coupled with the huge disruption of on-trade outlets, many of which were forced to close for almost half the year, the total volume of wine sales still recorded heavy losses.

Taxation and regulation also continued to hinder the growth of the category as all alcoholic drinks products in India have a similar tax structure in most states, with only minor differences. In other countries, wine is taxed at a lower rate as it has a lower ABV; however, this is not the case in India. This makes wine an expensive drink compared with prices in other countries. Also, on-trade sales are affected by typical rules like in Delhi, where wine and beer purchased by restaurants must be consumed within three days or else be disposed of, or the need to obtain more than 12 different licences, including one to play music in Bengaluru. These regulations make running an on-trade establishment a costly and complicated affair, which then translates into high prices for wine in these establishments. With consumer incomes under greater pressure in the wake of COVID-19, wine has become unaffordable for even more people.

Social drinking changes in response to the pandemic

The outbreak of COVID-19 in India has had a profound impact on how consumers choose to live their lives. This includes a change in social behaviour, with social distancing concerns and state-enforced restrictions altering how consumers choose to spend their leisure time. The formation of informal wine clubs has helped to support sales of wine against a backdrop of widespread disruption.

There has also been a change in perceptions about wine, which has traditionally been considered a woman's drink in India. A lot of men are now taking up wine drinking, particularly due to the perception of it being a healthier option than other types of alcoholic drinks. Informal wine clubs were formed in metro and Tier 1 cities in 2020, with friends and colleagues socializing in small groups over gourmet meals and wine. COVID-19 has heavily impacted social norms in the country and because of the lack of social occasions and the closure of on-trade outlets, people instead plan these intimate get-togethers at home.

Home seclusion leads to premiumization, supported by the rise of e-commerce

Wine experienced a premiumization trend in India in 2020 due to a spike in home consumption. When people consume wine at home, they often buy higher quality and costlier products. As on-trade establishments were closed for almost half the year and travel ground to a halt, those consumers who retained their jobs found themselves with more disposable income to indulge themselves. The major factors driving sales were celebrations such as birthdays and anniversaries, which are occasions on which people will generally spend more. Despite suffering heavy losses through the on-trade, which accounts for a large part of its business, Moët Hennessy India Ltd reported that it actually benefited from this premiumization trend through the off-trade in 2020, with consumers enjoying its home-grown Moët & Chandon range during the lockdown.

With little opportunity to indulge themselves in other ways due to the country's COVID-19 restrictions, some consumers increased their spending on wine. This was also supported by the development of e-commerce, which rose to prominence following the COVID-19 outbreak, with many consumers unable or unwilling to shop in store. Nonetheless, regulation around selling wine online varies from state to state and is often complex, which has made it hard for online wine sales to see more significant development.

Company share (%), 2016 to 2020
Company Name 2016 2017 2018 2019 2020
Samant Soma Wines Ltd 33.8 31.0 33.9 34.3 34.2
Grover Zampa Pvt Ltd 10.4 9.5 8.6 8.4 7.9
John Distilleries Pvt Ltd 1.2 6.2 6.8 6.3 7.6
United Spirits Ltd 6.1 5.9 5.7 5.9 6.0
Tonia Liquor Industries GOA 5.1 4.4 4.8 5.0 5.3
Pernod Ricard India Pvt Ltd 3.5 3.2 3.0 2.9 2.7
Sankalp Winery Pvt Ltd 2.5 2.4 2.2 2.1 2.0
Vinbros & Co Ltd 1.5 1.4 1.2 1.2 1.3
Moët Hennessy India Ltd 0.7 0.7 0.7 0.7 0.5
Others 31.6 31.5 33.1 33.2 32.3
Source: Euromonitor 2022

Recovery and opportunities

Wine tourism seen as important to the recovery and growth of wine

In the short-term, the recovery of wine is likely to be undermined by the second wave of COVID-19 that hit India in 2021. Although there were signs in June that the situation was starting to stabilize, it will nonetheless put a dent in the recovery of wine, especially through the on-trade. With India's vaccination program rolled out in early 2021, it is hoped that the situation will stabilize significantly in 2022 and consumers will start to return their normal lives. The reopening of on-trade outlets will also provide a significant boost to sales, with the on-trade being important to the overall industry, and especially for higher-end products and brands.

Another boost will come from the reopening of India's borders to tourism. Wine tourism is seen as important to the growth of wine in India, not only in terms of sales but also in terms of educating consumers about how to select, enjoy and consume wine. Wine tasting and food paring events are expected to become more commonplace, especially as the local audience for wine continues to expand. The state of Maharashtra acts a hub, hosting most of the wine tourism seen in the country. The government regulations in the state continue to entice wine producers in India, with wineries organizing wine tasting sessions and festivals to attract consumers.

Retailers expected to take a female-centric approach to selling wine

While more men are starting to drink wine in India, women still contribute to the majority of sales. Stakeholders across the value chain will therefore likely continue to take initiatives to focus the shopping experience around women's needs and demands. For example, women are generally more comfortable shopping for wine in modern retail grocery outlets than in food/drink/tobacco specialists. To address this issue, and make women more comfortable, there is an independent section at a wine and liquor store in the Star City Mall in Delhi where only women or couples are allowed inside to shop, with most of the store's sales coming from wine. This initiative has been so successful that we might see more retail outlets in the future following a similar model to make their target consumers more comfortable with shopping in store. There is also likely to be a greater emphasis on e-commerce, which allows consumers to shop discreetly from the comfort of home.

Brand share (%), 2016 to 2020
Brand Name Company Name 2016 2017 2018 2019 2020
Grover Vineyards Grover Zampa Pvt Ltd 10.4 9.5 8.6 8.4 7.9
Port Wine 1000 Samant Soma Wines Ltd 7.5 6.9 7.2 7.2 7.7
Goanas John Distilleries Pvt Ltd 1.2 6.2 6.8 6.3 7.6
Golconda Ruby United Spirits Ltd 4.5 4.4 4.3 4.5 4.8
Heritage Red Wine Samant Soma Wines Ltd 4.2 4.4 4.7
Vinsura Vineyards Sankalp Winery Pvt Ltd 2.3 2.2 2.1 2.0 1.9
Nine Hills Pernod Ricard India Pvt Ltd 2.0 1.7 1.7 1.6 1.6
Dom Sanchos Tonia Liquor Industries GOA 1.5 1.2 1.4 1.4 1.5
Sula Brut Samant Soma Wines Ltd 1.3 1.3 1.3 1.4 1.4
Santa Barbara Club Port Tonia Liquor Industries GOA 1.2 1.2 1.2 1.3 1.4
Source: Euromonitor 2022

Retailers and wineries expected to focus more on the customer experience when it comes to selling wine

A lot of large-format liquor stores (food/drink/tobacco specialists) came into existence in India during the review period, with these acting as an ideal place to sell wine. Most retail stores that sell wine are traditional vendors that have a small window and railing at front. However, this does not fit with the aspirations of many wine companies, especially those which sell higher-end products and are looking to provide consumers with an experience-based purchasing process. For example, in the last few years of the review period premium chain store Foodhall - which has stores in Mumbai, Bangalore, Delhi and Gurugram - has become popular among consumers. The chain's stores offer separate sections dedicated to wine and cheese. Meanwhile, in 2019, India saw the opening of Tonique stores in Bangalore and Hyderabad that stock close to 1,000 wine and hard liquor labels. They are spread over 10,000 square feet and provide a luxury consumer experience. A more recent example saw the opening of Delhi's first-ever experiential luxury liquor store, Delhi Liquor Co., which provides a bespoke consumer experience.

Given the premiumization seen in wine in 2020 it is likely that these types of stores will become more commonplace in India's metro and tier 1 cities over the forecast period. It could also open the door to more players and wineries looking to get a foothold in India, which is still seen as a market with huge potential, despite the setbacks presented by COVID-19.

Beer in India

A ban on alcohol sales during the initial lockdown and disruption of the opening of on-trade outlets impeded sales in 2020.

Beer declined by a CAGR of −2.2% in total volume terms from 2016 to 2020, to reach 2.2 billion litres in 2021.

The average unit price of beer rose by 1% in off-trade terms and 3% in on-trade terms in 2020.

Over the forecast period, beer is projected to increase at a 3.9% total volume CAGR to reach 2.6 billion litres in 2025.

Indian-consumed beer in million litres, 2016 to 2025, historical and forecast
Category 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* %2021-2025
Beer 2,348.9 2,148.5 −2.2 2,228.2 2,595.7 3.9
Lager 2,348.9 2,148.5 −2.2 2,228.2 2,595.7 3.9
Standard Lager 2,348.9 2,148.5 −2.2 2,228.2 2,595.7 3.9
Premium Lager 1,857.8 1,709.9 −2.1 1,767.5 2,042.5 3.7
Domestic Premium Lager 1,855.0 1,706.3 −2.1 1,763.4 2,036.4 3.7
Imported Premium Lager 2.8 3.7 7.2 4.1 6.0 10
Mid-Priced Lager 491.1 438.5 −2.8 460.7 553.2 4.7

Source: Euromonitor 2022

*CAGR: Compound Annual Growth Rate

2020 impact

Ban on beer sales and production results in heavy losses

In response to the COVID-19 outbreak in India, the government introduced a nationwide lockdown to curb the spread of the virus on March 25, 2020. As part of these measures, the government banned the production and sale of alcohol as it was deemed non-essential. The lockdown remained in place for 41 days, with the sale of alcoholic drinks forbidden through both off-trade and on-trade channels during this period. This had a significant impact on alcohol sales, with beer being particularly hard hit. Unlike many other alcoholic drinks, beer has a limited shelf life, so breweries had to write off some stock, which impacted their bottom line. Additionally, on-trade outlets had to dispose of unsold beer as it was unhygienic to sell beer which had sat unused for as long as five and a half months. March and April are normally a peak sales period for beer, which means the timing of the lockdown and the ban on sales was especially poor.

Tax hikes dealt a further blow to volume sales

The category suffered a further blow from the implementation of a Corona Cess tax (a form of tax that is levied by the government of a country to raise funds for a particular purpose), applied when food/drink/tobacco specialists were allowed to reopen after lockdown restrictions started to be relaxed. The tax ranged from 10% to 75% across the relevant states, putting beer, which contains only a moderate alcohol content, well outside the financial reach of most consumers. States that imposed the harshest tax increases witnessed the sharpest drop in revenues. For instance, the capital Delhi, which was the first to implement a COVID Cess of 70% on the retail price to earn additional revenue, had to reverse its decision after one month as this move proved to be counterproductive. In other states, the price of beer also rose sharply: 50% in Odisha, 35% in West Bengal and 25% in Puducherry (15% to 250% for brands registered in Tamil Nadu). Consumer demand subsequently plummeted, resulting in a dramatic fall in total volume terms being reported across West Bengal, Odisha, Telangana, Rajasthan, Karnataka and Puducherry compared with the same period in 2019. In response to the sharp drop in demand, most states started to roll back these tax hikes within a few months of introducing them.

The drop in demand caused by the high prices also had a knock-on effect on the whole supply chain, including farmers, barley malt suppliers and logistics partners, leading to a loss in revenue and employment and impacting the overall economy at large. In response to these challenges, some players launched smaller pack sizes in 2020 in an effort to make their beer more affordable for consumers and to avoid them switching to illicit alcoholic drinks. For example, Anheuser-Busch InBev India Pvt Ltd, which produces the Budweiser brand of domestic premium lager, introduced a smaller 250 millilitre pack size. The strategy also supported the introduction of e-commerce in India as many consumers showed a preference for smaller pack sizes when shopping online for the first time.

Players call for Fair Beer Trade

Beer producers are calling for Fair Beer Trade, such as the fair tax imposed by the Haryana Government, which introduced a policy that taxes beer and wine based on alcohol content. This varies from the practice in other states, which tax beer by volume, irrespective of the alcohol content. The Haryana Government's policy takes into consideration not only the alcohol content but also the health implications of consuming beverages with a higher alcohol content. Many players continue to push for a fairer playing field in the beer trade, encouraging state governments to take into account the way in which tax reforms influence consumption patterns in the country. According to players present in beer, this can only be achieved through clear demarcations between drinks with a low alcohol content and those with a high alcohol content. Beer producers have also pointed to most other global markets, which calculate tax based on the pure alcohol content.

Beer is unaffordable for many consumers because of the way it is taxed in most states. The introduction of the Corona Cess tax of between 10% and 75% in the wake of COVID-19 only added to these price pressures, pushing beer prices further out of reach of many consumers. Furthermore, it only adds to the attraction of hard spirits, which are taxed considerably less in most states.

Company share (%), 2016 to 2020
Company Name 2016 2017 2018 2019 2020
UB Group 50.5 52.2 52.7 53.8 54.0
SABMiller India Ltd 18.5 17.8 17.4 17.2 17.1
Carlsberg India Pvt Ltd 15.6 15.2 17.1 16.0 15.4
Mohan Meakin Ltd 3.6 3.3 3.3 3.2 3.3
Anheuser-Busch InBev India Pvt Ltd 2.9 3.3 3.4 3.2 3.2
Som Distilleries & Breweries Ltd 1.8 2.3 2.3 2.4 2.4
Mount Shivalik Industries Ltd 2.1 2.1 1.9 1.7 1.7
B9 Beverages Pvt Ltd 0.0 0.1 0.2 0.3 0.3
Cobra Indian Beer Pvt Ltd 0.2 0.2 0.2 0.2 0.2
Brindco Sales Ltd 0.1 0.1 0.1 0.1 0.1
Others 4.7 3.4 1.4 1.8 2.3
Source: Euromonitor 2022

Recovery and opportunities

Surge in new cases expected to undermine demand for beer in 2021

India was hit by a devastating second wave of COVID-19 in April 2021, which put pressure on resources as hospitals and health centres struggled to manage the crisis amid a rising death toll. In response, a further lockdown was introduced in an effort to contain the virus. Under normal circumstances, beer sales are significantly higher in April and May than at any other time of the year in India, with beer seen as a summer beverage. The lockdown thus likely had a significant negative impact on 2021 beer sales.

With the government forging ahead with its vaccine program, it is hoped that COVID-19 will finally be brought under control by 2022. As restrictions are eased, it will become easier for consumers to access beer through both off-trade and on-trade. Nevertheless, the economic impact of COVID-19 is likely to restrict consumer spending and this could limit the recovery of beer, with it already being seen as expensive by many consumers due to its high price.

Craft beer full of untapped potential

Despite the second wave of COVID-19 seen in 2021, the enthusiasm for craft beer manufacturers has not wavered. There has been a steady influx of craft manufacturers opening their microbreweries in India across metro and Tier 1 cities. For example, Scottish manufacturer Brewdog opened its first microbrewery in February 2021 in Mumbai and planned to open 10 more microbreweries by the end of that year. The company has ambitious plans to open close to 100 microbreweries in India over the next five to six years. Similarly, Anheuser Busch InBev is partnering with The Indian Hotels Company Limited (IHCL) to launch 15 micro-breweries at premium hotels across India. Meanwhile, in March 2021, Bangalore witnessed the opening of the world's largest microbrewery, Ironhill. The microbrewery is spread across a massive area of 130,000 square feet.

India is home to approximately 318 million millennials and this demographic represents huge potential for craft beer manufacturers. They are targeting these consumers as they are more open to experimenting with flavours, tastes and aroma profiles. As has been seen in other markets, craft beer producers may look to introduce more products inspired by local ingredients or taste profiles. The leading beer companies will likely also explore more opportunities in craft beer, either through producing their own ranges or acquiring smaller craft breweries.

E-commerce presents new opportunities for expansion

E-commerce and accompanying business models for home delivery are expected to aid the growth and recovery of beer sales over the forecast period. COVID-19 not only ensured the arrival of e-commerce in India but it was also responsible for the advent of new business models alongside the rise of craft beer. For example, 2020 saw the emergence of Tapped Flight, a subscription-based business operating in Mumbai and Pune that offers both on-demand and subscription services. The company curates and sources beer directly from domestic and international brewers and delivers it right to the consumer's doorstep. When India faced the second wave of COVID-19 and, in most states, on-trade establishments including microbreweries were closed, the company offered consumers the luxury of drinking brewed beer from the comfort and safety of their home. Also, when people in India consume alcohol at home, they tend to prefer buying expensive premium brands, thereby aiding the growth of beer.

Category background

Lager price band methodology

Most beer brands in India fall in either the mid-priced or premium segments. Total volume sales of lager are most robust for premium products, but many premium beer brands are subject to downward price pressure and aggressive promotional strategies through off-trade channels. Kingfisher and Foster's Lager are domestic premium brands while others, such as Corona Extra, Amstel and Beck's, are included under the imported premium segment. For lager, typically, price and alcohol content correlate. Lager with a higher alcohol content is usually expensive. In the off-trade channel, imported brands also tend to carry a higher price. Kingfisher Strong, and brands such as Foster's and Tuborg, represent the mid-priced band, which is also the largest band by volume. Heineken, Kingfisher Ultra and Carlsberg Elephant represent the premium band. There are very few brands in lager that are present in the economy band because beer is not taxed in India based on pure alcoholic content, making it an expensive product.

Brand share (%), 2016 to 2020
Brand Name Company Name 2016 2017 2018 2019 2020
Kingfisher Strong UB Group 29.2 31.9 33.3 33.9 34.0
Tuborg Carlsberg India Pvt Ltd 13.1 13.0 14.4 13.5 12.9
Kingfisher Premium Lager UB Group 9.7 9.8 9.7 9.6 9.7
Knock Out (Anheuser-Busch InBev NV) SABMiller India Ltd 9.2 8.5 8.5 8.8 8.7
Haywards 5000 (Anheuser-Busch InBev NV) SABMiller India Ltd 8.3 8.4 8.0 7.6 7.5
Budweiser Anheuser-Busch InBev India Pvt Ltd 2.9 3.3 3.4 3.2 3.2
Carlsberg Elephant Carlsberg India Pvt Ltd 2.5 2.1 2.7 2.5 2.5
UB Export Lager Beer UB Group 2.8 2.6 2.6 2.5 2.4
Kingfisher Ultra UB Group 0.6 1.0 1.4 1.8 1.9
Golden Eagle Mohan Meakin Ltd 2.0 1.9 1.8 1.8 1.8
Thunderbolt Super Strong Mount Shivalik Industries Ltd 2.1 2.1 1.9 1.7 1.7
Source: Euromonitor 2022

According to the Craft Brewers Association of India, a craft brewer must be:

  • Small - Annual production of less than 10 million litres.
  • Independent - Less than 25% of the craft brewery should be owned or controlled by a beverage alcohol industry member.
  • Traditional - The majority of its total beverage alcohol volume should be in beers, the flavours of which derive from traditional or innovative brewing ingredients and their fermentation.

Spirits in India

The ban on sales during the lockdown combined with the disruption of on-trade outlets resulted in heavy losses for spirits in 2020.

Sales declined by a CAGR of −2.4% in total volume terms in 2020 to reach 2.5 billion litres.

Premium other blended Scotch Whisky was the most dynamic category in 2020 with a CAGR of 3% in total volume terms.

Indian consumed spirit in thousand litres, 2016 to 2020 (Data only available to 2020)
Category 2016 2017 2018 2019 2020 CAGR* % 2016-2022
Spirits 2,718,021.0 2,720,169.3 2,891,730.3 3,013,691.4 2,469,982.5 −2.4
Brandy and Cognac 558,817.8 554,068.6 570,052.9 584,985.9 467,309.6 −4.4
Liqueurs 103.0 122.0 142.3 165.8 106.6 0.9
Rum 382,596.5 384,377.1 387,888.0 392,058.2 299,619.7 −5.9
Dark Rum 375,327.1 376,800.5 380,005.2 383,897.0 293,251.6 −6.0
Premium Dark Rum 37,908.0 38,433.7 38,950.5 39,656.6 29,970.3 −5.7
Standard Dark Rum 136,506.5 140,207.5 133,799.8 128,567.1 98,737.8 −7.8
Economy Dark Rum 200,912.6 198,159.4 207,254.8 215,673.3 164,543.5 −4.9
White Rum 7,269.3 7,576.6 7,882.8 8,161.2 6,368.1 −3.3
Super Premium White Rum 130.8 134.9 144.3 163.2 119.6 −2.2
Premium White Rum 2,607.5 2,751.8 2,679.4 2,883.4 2,306.5 −3.0
Standard White Rum 2,643.9 2,819.3 2,775.5 2,733.2 2,242.2 −4.0
Economy White Rum 1,887.1 1,870.7 2,283.7 2,381.4 1,699.8 −2.6
Whiskies 1,679,589.3 1,680,426.1 1,828,385.7 1,927,019.0 1,612,946.1 −1.0
Blended Scotch Whisky 22,797.8 25,157.9 27,184.4 29,238.1 23,225.9 0.5
Super Premium Other Blended Scotch Whisky 7,092.4 7,821.6 8,467.9 9,116.4 7,200.0 0.4
Premium Other Blended Scotch Whisky 2,092.8 2,515.8 2,827.2 3,008.6 2,357.4 3.0
Economy Other Blended Scotch Whisky 13,612.6 14,820.5 15,889.3 17,113.1 13,668.4 0.1
Single Malt Scotch Whisky 1,446.2 1,549.9 1,734.1 1,927.5 1,174.7 −5.1
Other Whiskies 1,655,345.3 1,653,718.3 1,799,467.2 1,895,853.4 1,588,545.6 −1.0
White Spirits 96,914.4 101,175.4 105,261.4 109,462.6 90,000.4 −1.8
Gin 23,404.4 24,236.9 24,940.7 25,771.2 20,951.1 −2.7
Super Premium English Gin 280.9 319.9 304.3 317.0 261.9 −1.7
Premium English Gin 63.2 70.3 74.8 79.9 64.9 0.7
Economy English Gin 23,060.4 23,846.7 24,561.6 25,374.4 20,624.3 −2.8
Vodka 73,510.0 76,938.4 80,320.7 83,691.3 69,049.3 −1.6
Super Premium Vodka 10,585.4 11,309.9 12,032.0 11,959.5 9,791.2 −1.9
Premium Vodka 39,107.3 41,085.1 43,204.5 43,519.5 36,734.2 −1.6
Economy Vodka 23,817.2 24,543.4 25,084.2 28,212.3 22,523.9 −1.4

2020 impact

Spirits hard hit by ban on sale and manufacture of alcohol during the lockdown

During the initial lockdown in India, which came into effect on March 25, 2020, alcoholic drinks including spirits were deemed non-essential. The government banned the manufacturing and sale of those products during the lockdown through both on-trade and off-trade channels. Premium and super premium spirits were the hardest hit as these products typically rely on social events for sales, while they also suffered from the closure of bars for almost half the year. Imported spirits brands were particularly hard hit, as they generally rely more on on-trade sales.

In addition to restrictions on sales and manufacturing and the disruption of the opening of on-trade establishments, 18 state governments also introduced a Corona Cess tax in the range of 10% to 75%, which also seriously impacted volume sales. These taxes were introduced to help carry the burden of the additional costs created by COVID-19; however, within a few months of being introduced many states backtracked and reduced their taxes.

United Spirits retained a clear lead in 2020 thanks in part to its strong distribution network

Even after the lockdown was lifted in 2020, companies found themselves operating with limited resources, partly due to the new manufacturing norms but also due to a labour shortage. Players were engaged in a race to put their products back on retailers' shelves as they looked to benefit from an anticipated surge in demand as alcohol became available again. In such a scenario, many companies decided to consolidate their portfolios, focusing their resources on their most popular brands and products, while discontinuing the production of those that were less popular. Across the spectrum, in almost all areas of the country where alcohol is legal, once the lockdown was lifted, consumers generally prioritized buying the most trusted or most popular brands.

This preference for more established brands favoured leading player United Spirits, which saw a slight increase in its total volume share in 2020, supported by global brand owner Diageo Plc. The company benefits primarily from Diageo's well-developed distribution network in India. It is also reaping the rewards of investing considerable resources into upgrading its product portfolio by concentrating on new product development, particularly in whiskies and vodka. United Spirits has also adopted a franchise-based fixed fee model for its premium offerings, whereby it outsources the manufacturing and sales of popular brands Bagpiper, Director's Special and Haywards and McDowell's No. 1 in more than 10 states.

Players launched smaller pack sizes to counter the impact of the Corona Cess tax

After food/drink/tobacco specialists were able to reopen in May 2020, 18 states implemented a Corona Cess tax on alcoholic drinks in the range of 10% to 75%. This made spirits even more expensive, pushing them outside of the reach of many consumers, although most states reduced or removed the tax after a few months. Faced with these tax hikes and prevailing economic uncertainty as a result of COVID-19, some companies launched smaller pack sizes within spirits in an effort to make their products more accessible and to stop consumers from downtrading. For example, Diageo India Pvt Ltd launched 180 ml bottles for its blended scotch whisky portfolio, Amrut Distilleries launched "nip" bottles for its single malt whiskies and Radico Khaitan Ltd launched miniature packs for its vodka and whiskies brands.

These are just some of the spirits manufacturers which introduced smaller pack sizes for their brands in 2020. They did so to provide the same quality at a lower price, as affordability became an issue following the imposition of the Corona Cess tax. The strategy also aided the introduction of e-commerce in India as consumers started shopping for alcohol online for the first time. This being a new experience for many people, they preferred to order miniatures during their first purchases.

Company Share (%), 2016 to 2020
Company Name 2016 2017 2018 2019 2020
United Spirits Ltd 35.0 33.4 32.2 31.2 31.4
Pernod Ricard India Pvt Ltd 13.5 15.2 16.7 17.5 17.5
Allied Blenders & Distillers Pvt Ltd 10.7 11.3 11.3 11.5 11.8
Radico Khaitan Ltd 5.5 5.9 5.8 6.1 6.8
John Distilleries Pvt Ltd 4.5 4.9 5.1 5.5 5.4
Jagatjit Industries Ltd 3.7 3.3 2.7 2.3 2.4
Tilaknagar Industries Ltd 2.0 2.1 2.0 2.0 1.9
Mohan Meakin Ltd 1.7 1.8 1.7 1.7 1.6
Amrut Distilleries Pvt Ltd 1.3 1.2 1.2 1.2 1.1
Shiva Distilleries Ltd 0.8 0.9 0.8 0.8 0.8
Source: Euromonitor 2022

Recovery and opportunities

Leading players offer support as on-trade outlets struggle for survival

The onset of a severe second wave of COVID-19 in 2021 set back the recovery of spirits, with further lockdowns introduced as the government tried to contain the virus. On-trade establishments were forced to close for much of 2020 and therefore this second wave was likely hugely detrimental to their future survival, with more outlets likely to close as a result. Nevertheless, companies within spirits continued to support pubs and bars as they wanted to ensure that they would recover quickly once the lockdowns were finally lifted and the situation was normalized. The larger companies present in spirits took the lead in this respect.

In 2020, Diageo carried out a range of initiatives under its "Raising the Bar" program, pledging INR750 million. These initiatives included deploying starter kits, sanitization stations, contactless dining and screens; and putting out digital ads on platforms like Zomato for thousands of outlets. It relaunched the program in February 2022. Similarly, Pernod Ricard India partnered with the National Restaurant Association of India (NRAI) to pledge INR14 million in support for the welfare of the employees who were impacted. Whether these initiatives will be enough to prevent widespread closures remains to be seen.

Players looking to expand the knowledge of whiskey enthusiasts

As most sales of spirits come from whiskies in India, companies are taking the initiative to educate consumers and to fight some of the preconceived notions around these drinks. Consumers in India are fascinated with the age of whiskies; however, companies want to let consumers know that they are many factors at play, like the ingredients and the quality of the casks, as well as the age. Companies are therefore trying to reiterate that age is not the only signifier of quality.

In the last few years of the review period, Paul John stopped mentioning the age of the whiskey on its bottles. The company wanted consumers to judge its whiskies on the taste/flavour rather than just the age. Meanwhile, Scottish company Bruicladdi provides greater clarity to consumers by sharing information on the cask type and the techniques used to grow the ingredients used in its whiskies, like barley. These initiatives not only educate consumers, but are also expected to help drive growth in the category, with better informed consumers more likely to trade up to premium products, but also to enjoy whiskies more often in general.

Millennials expected to have a big say in the future of spirits

The large number of young adults of legal drinking age in India are becoming increasingly well-travelled and are looking for new products and trends that can satisfy their desire for new experiences. In order to target these consumers, large companies such as Diageo and Pernod Ricard have allocated more of their resources to marketing and are expanding their distribution, making it more specific to this consumer base. They have also realized that in order to unlock the full potential of the Indian market, they have to reach the increasing number of cities which have a population of over one million.

Prior to the COVID-19 outbreak, this large base of younger adults was becoming increasingly drawn to spirits beyond the dominant category of whiskies. For example, there was a growing appreciation for vodka and gin. As on-trade outlets reopen, these spirits should start to see healthy growth again, having shaken off perceptions such as gin being an older man's drink and vodka being a woman's beverage of choice. Millennials perceive them to be refreshing drinks which can be consumed with juice and tonic water, making them a suitable alcoholic alternative to carbonated beverages. Another reason for the growth is that white spirits such as gin and vodka are available in various flavours, a positive factor that resonates with the palates of younger adults. Millennials are also more adventurous in their choice of beverages and like to try cocktails to add variety and innovation to their consumption occasions, all of which should support growth in white spirits.

Category background

Vodka, gin, other blended Scotch whisky, dark rum and white rum price band methodology

Classification of these spirits products is based purely on pricing, taking a typical brand, usually the leading brand by volume, as the benchmark price, which is indexed as 100%. The benchmark brand will be a mid-priced brand.

Brand share (%), 2016 to 2020
Brand Name Company Name 2016 2017 2018 2019 2020
Officer's Choice Allied Blenders & Distillers Pvt Ltd 10.6 11.2 10.9 11.1 11.4
McDowell's No. 1 (Diageo Plc) United Spirits Ltd 8.5 8.7 9.0 8.9 9.2
Imperial Blue Pernod Ricard India Pvt Ltd 5.6 6.3 7.1 7.5 7.5
Royal Stag Pernod Ricard India Pvt Ltd 5.5 6.2 6.7 7.0 7.1
McDowell's No. 1 Celebration (Diageo Plc) United Spirits Ltd 5.3 5.1 4.3 4.0 3.7
Original Choice John Distilleries Pvt Ltd 3.8 3.7 3.5 3.6 3.6
8PM Radico Khaitan Ltd 1.9 2.3 2.4 2.6 3.1
Haywards (Diageo Plc) United Spirits Ltd 3.0 2.8 2.9 2.9 3.0
McDowell's No. 1 Brandy (Diageo Plc) United Spirits Ltd 2.7 2.9 2.9 2.9 2.8
Blenders Pride Pernod Ricard India Pvt Ltd 1.9 2.1 2.3 2.4 2.3
Source: Euromonitor 2022

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Resources

  • Euromonitor, 2022

Wine, beer and spirits in India
Global Analysis Report

Prepared by: Hongli Wang, Senior Market Analyst

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