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During 2023, India’s alcoholic beverage industry witnessed robust growth driven by a significant rise in alcohol consumption nationwide. Nita Kapoor, CEO, International Spirits and Wines Association of India told businessline on the development of the sector, regulatory environment and future outlook.
How would you describe the journey of the alcobev industry in 2023?
We close the year with the good news that favourable demographics and a knowledgeable consumer base are driving the value of the alcobev industry by choosing to drink better quality products. Millennials are choosing high-end spirits, wines and champagne. However, there is no relief for the alcobev manufacturers as inflation and the state’s ambition of maximising excise revenues have impacted margins significantly.
How did the rapidly growing trend of premiumization shape up in 2023, what were the advancements seen?
Premiumisation has now become a behavioural choice and it is fast establishing itself. Over the last year, the spirits grew by 12.1 per cent, while the premium India Made-Foreign Liquor (IMFL) consumption grew by 17.6 per cent. The overall share of premium brands increased from 39 per cent in 2018 to 47 per cent in 2022. The Indian Single Malts, too increased by 142 per cent in 2022 over 2021, outselling the imported single malts. The premiumisation of brandy share is at 18 per cent, rum is at 39 per cent, and vodka stands at about 78 per cent.
Has the sector finally bounced back for good from the Covid times lows, have the volumes recovered?
While the sector has bounced back from covid times lows, the alcohol beverage consumption is expected to further increase and reach 313.0 billion litres by 2025. Due to the pandemic, there was a dip in consumption of alcoholic beverages in 2022 at 272.0 billion litres as against 306.5 billion litres in 2019. Also, in terms of per capita pure alcohol consumption, the last two decades have seen an increase of 12.7 per cent from 5.5 litres per capita in 2000 to 6.2 litres per capita in 2018.
The key consumption drivers for the alcobev include the changing demographics as in India, 10-12 million people are expected to reach the legal drinking age each year. Growing urbanisation and greater social/cultural acceptance, the increased purchasing power of the middle class, the changing retail landscape, the influence of digital media, and e-commerce are some of the other consumption patterns we have seen which will drive the trend.
What are the regulatory and taxation changes that the industry experienced this year, and what has been the effect of the same?
Given the conclusion of elections in 5 states and with the general assembly elections scheduled in 2024, the regulatory environment has been a challenge to address. ISWAI’s mainstay is for states to consider rationalization of state excise duty, and address the inflation of input materials predominant being ENA where inflation has touched a high of 9 per cent over the previous year..
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