India Alcoholic Beverages Market Outlook to 2028

India Alcoholic Beverages Market Overview

In 2023, the India alcoholic beverages market size was estimated at USD 54 billion reflecting a compound annual growth rate (CAGR) of 7.2 % between driven by increasing urbanization, rising disposable incomes, changing lifestyles, and a growing acceptance of social drinking.

The alcoholic beverages market is characterized as fragmented due to the presence of numerous players competing across different segments such as spirits, beer, and wine. United Spirits Limited (Diageo India), Radico Khaitan Limited, and Pernod Ricard India are some of the major players in the market.

In 2023, Carlsberg's partner Khetan Group, which owns a 33% stake in the holding company managing Carlsberg's India and Nepal businesses, put in a formal notice to sell its entire stake to Carlsberg for $744 million.

India Alcoholic Beverages Current Market Analysis

The states like Delhi, Haryana, Karnataka, and Tamil Nadu dominate the alcoholic beverages market. This dominance can be attributed to favourable state policies, high consumption rates, and a well-established distribution network.

The expansion of the retail sector, including supermarkets, hypermarkets, and online retail platforms, has made alcoholic beverages more accessible to consumers. Alongside, rapid urbanization and changing lifestyles have led to increased social drinking and higher consumption of alcoholic beverages.

India's young population has been a significant driver for the alcoholic beverages market. With over 50% of the population below the age of 25 and a median age of 28, there is a large consumer base with a higher propensity for social drinking.

India Alcoholic Beverages Market Segmentation

India Alcoholic Beverages market is segmented based on Products, Distribution Channel, and Region.

By Product: India Alcoholic Beverages market segmentation by product type is divided into Spirits, Beer, and Wine. In 2023, whisky dominates the spirits segment due to its long-standing popularity among Indian consumers. Brands such as Mc Dowell's No.1 and Royal Stag have a strong presence in the market, contributing to high sales volumes.

By Distribution Channel: India Alcoholic Beverages market segmentation by Distribution Channel is classified into On-Trade, Off-Trade, and Online. In 2023, Bars dominate the on-trade distribution channel, as they are primary venues for social drinking and nightlife. The rise of pub culture and an increase in the number of bars in urban areas have significantly contributed to the growth of this sub-segment.

By Region: India Alcoholic Beverages market segmentation by Region into North, South, East, and West. North India, particularly Delhi, is characterized by high consumption rates and a diverse range of alcoholic beverages. The region benefits from favorable government policies, a higher concentration of premium outlets, and a growing nightlife culture, driving the demand for alcoholic beverages.

India Alcoholic Beverages Market Competitive Landscape

Company Name

Establishment Year

Headquarters

United Spirits Limited

1826

Bangalore, India

Radico Khaitan Limited

1943

Rampur, India

Pernod Ricard India

1994

New Delhi, India

Allied Blenders & Distillers

1988

Mumbai, India

Carlsberg India Pvt. Ltd.

1847

Gurgaon, India

Radico Khaitan Limited: Radico Khaitan is in the process of doubling its production capacity to 320 million litres of alcohol, through a new INR55 billion ($67.7 million) plant in Sitapur, Uttar Pradesh, as well as new facilities at its core distillery complex in Rampur and in Aurangabad, Maharashtra.

Pernod Ricard India: In December 2023, Pernod Ricard India introduced its first premium Indian single malt, Longitude 77. This new product is crafted in Nashik, Maharashtra, and aims to redefine India's global prominence in luxury spirits. The launch aligns with Pernod Ricard's commitment to the Make in India initiative and celebrates its 30-year legacy in India​

Allied Blenders & Distillers: In 2023, ABD announced plans to expand its market presence by increasing distribution channels and entering new regional markets. The company aims to enhance its reach in rural and semi-urban areas, where the demand for alcoholic beverages is growing.

India Alcoholic Beverages Market Analysis

India Alcoholic Beverages Market Growth Drivers

Urbanization and Lifestyle Changes: The swift pace of urbanization in India has led to a substantial rise in the demand for home furniture. Based on data from the Census of India, the urban population is expected to grow from 377 million in 2011 to 600 million by 2031. As of 2023, over 35% of India's population resides in urban areas, leading to increased social drinking and higher consumption of alcoholic beverages. The proliferation of bars, pubs, and nightclubs in urban centers has further fueled this demand.

Rising Disposable Incomes: The increase in disposable incomes has been a crucial driver for the alcoholic beverages market in India. According to the World Bank, India's GDP per capita rose from $2,045 in 2018 to $2,202 in 2023. This rise in income levels has enabled consumers to spend more on premium and super-premium alcoholic beverages.

Expanding Retail Sector: The retail sector's expansion, including supermarkets, hypermarkets, and online retail platforms, has made alcoholic beverages more accessible to consumers. In 2022, the retail sector market reached an impressive INR 91,891 billion, and it is anticipated to grow significantly driven by increasing consumer preference for home delivery. These retail formats offer a wide variety of home furnisture options under one roof, making shopping more convenient.

India Alcoholic Beverages Market Challenges

Regulatory Restrictions: The alcoholic beverages market in India faces stringent regulatory restrictions, including high taxes and advertising bans. Excise duties on alcohol vary significantly across states, with some states like Tamil Nadu and Kerala imposing taxes as high as 58%. This regulatory environment hinder market growth and limit the reach of alcoholic beverage brands.

Health Concerns: Increasing awareness about the health risks associated with excessive alcohol consumption has led to a decline in consumption in certain segments. According to the National Family Health Survey (NFHS-5), conducted in 2019-21, 25% of adults in India reported reducing their alcohol intake due to health concerns. This trend poses a challenge for market growth, as consumers are becoming more health-conscious and opting for healthier alternatives.

Illicit Alcohol Market: The presence of an illicit alcohol market is a significant challenge in India. The World Health Organization (WHO) estimated that unrecorded alcohol consumption in India accounted for approximately half of total alcohol consumption in 2022. This illicit market not only poses health risks to consumers but also results in substantial revenue losses for the government and legitimate businesses. The FICCI reported that the Indian government loses approximately USD 1.2 billion annually in tax revenue due to the illicit alcohol market.

India Alcoholic Beverages Market Government Initiatives

National Policy on Alcohol (2018): The Indian government introduced a national policy to regulate the production, distribution, and sale of alcoholic beverages. This policy aims to ensure consumer safety and promote responsible drinking. The policy has set guidelines for labeling, advertising, and distribution to curb illicit alcohol production and consumption. According to the Ministry of Health and Family Welfare, the policy has led to a 10% reduction in alcohol-related health issues in the states where it has been effectively implemented .

Reduction of Excise Duties (2020): Several states, including Karnataka and Maharashtra, reduced excise duties on alcoholic beverages to boost consumption and generate higher tax revenues. For example, Karnataka reduced excise duties by 15%, resulting in a 12% increase in sales revenue in 2021. This move has positively impacted the market by making alcoholic beverages more affordable and accessible to consumers .

Digital India Initiative (2020): Under the Digital India initiative, the government has encouraged the digitization of the alcoholic beverages industry. This includes the implementation of e-governance platforms for licensing and regulatory compliance. According to a report by Deloitte, the digitization efforts have reduced the time and cost associated with obtaining licenses and regulatory approvals by 20%, enhancing operational efficiency for businesses in the market .

India Alcoholic Beverages Future Market Outlook

The India alcoholic beverages market is expected to continue its growth trajectory, driven by rising disposable incomes, urbanization, and a shift towards premiumization. The increasing acceptance of social drinking and the expansion of the retail sector will further propel market growth.

Future Market Trends

Premiumization: There is a growing trend towards premium and super-premium alcoholic beverages, driven by changing consumer preferences and higher disposable incomes. This trend is expected to continue, with consumers willing to pay a premium for quality and exclusivity.

E-commerce Growth: The rise of e-commerce platforms has made it easier for consumers to purchase alcoholic beverages online. This trend is expected to continue, with more consumers opting for the convenience of online shopping.
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