Trends in the Indian Alcohol Industry

As per Ministry of Social Justice and Empowerment in its report on "Greatness of in India 2019",
alcohol is the most widely recognized psychoactive substance utilized by Indians. Among alcohol
clients, national alcohol (around 30%) and spirits or Indian Made Foreign Alcohol (around 30%) are
the prevalently devoured refreshments. States with the most elevated pervasiveness of alcohol use
are Chhattisgarh, Tripura, Punjab, Arunachal Pradesh and Goa.

Alcohol consumption among both men and women is higher in rural India than in urban India, the
National Family Health Survey-5 (NFHS-5), 2019-21 has found. Overall, 1% of women aged 15 and
over drink alcohol, compared to 19% of men in the same age group. This breaks up into 1.6% (rural)
and 0.6% (urban) among women, and 19.9% and 16.5% respectively among men.

Source: NFHS-5

The pattern of consumption in India has changed from occasional and ritualistic use to social
drinking and has become an acceptable leisure activity. Hazardous drinking is recorded in people
with a range of educational and socio-economic backgrounds. While drinking is portrayed as a
consequence of poverty, it is also associated with relative affluence. The patterns of drinking are
changing rapidly with major changes in economic policies and growing consumerism in the country.
While consumption of spirits dominates the Indian market, its share in volume terms has decreased
from 55.02 percent to 50.31 percent during 2013-2022. The share of beer consumption has
increased from 44.56 per cent to 49.25 percent while that of wine has remained almost constant
between 0.42 and 0.50 percent.
The primary survey shows that over 70 percent of the growth in alcoholic beverages consumption in
India in the next decade will be driven by the lower middle and upper middle-income groups, and
there is a growing trend towards product premiumisation. Premium products have recorded a five-
year CAGR of 7.7 per cent in 2018, of which bottled imported spirits recorded a CAGR of 10.9 per
cent.

The trends in the alcohol industry with respect to consumer behaviour can be broadly categorised as
follows:
1. Female Alcohol Consumption on the Rise
Around 43.7 per cent women in the age group of 18-30 years consumed alcohol out of habit or
desire to do so, 41.7 per cent women in the age group of 31-45 years consumed alcohol due as an
occupational requirement or because of social norm. Over 53 per cent women above 60 years and
39.1 per cent women in 46-60 years had alcohol for emotional reasons.
2. Increasing Popularity of Wine
The country that loves the browns is gradually but steadily developing a taste in reds and whites,
even though Indians are occasional wine drinkers. However, with the pandemic and the erratic
monsoons, the wine industry has not shown signs of growth. In October 2020, consulting firm Avalon
Global Research traced Maharashtra, Karnataka, Goa and Himachal Pradesh as key wine producing
states and stated that in the Indian market, Sula holds a 60% market share. The young population
and exposure to western cultures were driving the growth in the industry but attributed the slow
growth to economic slowdown and government policies.
3. Demand for Expensive Liquor is Growing
Premiumization has been an especially significant factor in the Indian alcoholic beverage industry,
with the proliferation of budget options making premium products more appealing, and consumers
likely to treat drinks as something worth spending a little extra on. All indicators are that this trend
will actually accelerate in 2021 and beyond.
4. High Growth White Spirits
Drinks based on premium vodka, white rum and tequila are increasing in popularity, indicating a shift
in preference to more expensive and mainly imported "white spirits" as the economy booms.
Indian consumers are increasingly connected to the global world and looking for newer experiences.
Young Indians don't want to drink what their fathers and grandfathers drank.
5. Rise in consumption of beer
Market research store Research and Markets’ 2021 report titled ‘Beer Market in India 2021’ predicts
that in terms of volume, the beer market, which was valued at 5,533.73 million litres in 2020, is
expected to reach 9,004.74 million litres by 2025. Urbanization and change in societal perspective,
along with the launch of new low- and no-alcohol variants of beer and technological advancements
will be significant factors propelling growth. Another reason why beers are becoming the favourite is
that they are lighter than alcoholic drinks and less harmful. 
6. Ready-to-mix cocktails 
The demand for at-home services during the pandemic has acted as an eye-opener for brands
apprehensive to enter this segment previously. This was true for cocktails as well, with whatever
ingredients were available at home as bars and restaurants remained shut. This proved to be a
golden opportunity for brands to bring out cocktail mixes for consumers to prepare at home. To
make the whisky category more accessible and recruit new consumers, alco-beverage companies
have been promoting whisky cocktail kits, though the phenomena remain restricted to metros.
7. The pandemic push
The Indian liquor market has been undergoing a transformation in the past three to four years as the
demand for quality products is growing, especially around the urban areas—the Covid-19 pandemic
only hastened the process. With the extra income due to the lockdown (as travel cost was saved),
people gravitated towards improving the quality of the products they bought, including upgrading
the drinks they consumed. This was widely witnessed during the lockdown as people lined up to buy
liquor even as most shops remained shut. This prompted the home delivery of liquor as many states
permitted the same. According to market research firm YouGov’s 2021 report, consumption of
alcohol in India has increased for three in 10 urban Indians (29%).