The Indian alcohol and liquor industry is of interest to people who enjoy the occasional tipple, as well as the teetotallers. The industry is finding its way into the portfolio of many investors, who are convinced by the increased market presence and financial robustness of Indian liquor houses.
The distilleries in the Scottish Highlands, vineyards in Bordeaux and the breweries of Bavaria have legendary status, but India has an underrated cultural legacy when it comes to liquor making. From the intoxicating Soma mentioned in the Rig Veda to the beers and wines served in the friendly neighbourhood pubs in Indus Valley civilization, India has had a multi-millennium tryst with alcoholic beverages.
Presently, the Indian alcoholic beverage market is the third largest in the world. The estimated annual consumption of 970 crore litres is valued at Rs 4.5 lakh crores. The Indian alcohol industry is home to a diverse range of products as well, from traditional brews to modern distilleries. Apart from being a reflection of consumer behaviour, regulatory reforms and globalisation trends also influence the industry in many ways. It cannot be denied that the Indian liquor industry gained a solid footing in the domestic market, which has subsequently enabled it to make a mark in the overseas market.
The domestic market grew between 7 to 8% in 2023, on the back of consistent growth in the previous years as well. The International Spirits and Wines Association of India expects that the Indian alcoholic beverage industry can reach $64 billion in five years. The body also estimated that more than 80 lakh people are getting direct or indirect employment through this industry, which is 1.5% of the total employment in the country. The alcohol industry generates employment in related sectors such as agriculture, food and beverages, retail, hospitality and tourism, etc.
Indian-made Foreign Liquor (IMFL) controls over 55% of the domestic liquor market in India. This is significant progress, considering that organised alcohol production in India started in 1805, much later than in Europe. The segment registered a 14% growth in FY23. Notably, IMFL includes both Indian and imported brands, albeit in India. The overwhelmingly popular beverage in India is whisky, commanding 63% market share. Not surprisingly, Indian liquor brands have a strong presence in this sub-segment.
Indian liquor brands have made substantial inroads into overseas markets in recent years. India’s vibrant startup culture can be seen in the liquor industry as well, perhaps buoyed by the Make in India mission as well. Kumaon & I by Himmaleh Spirits, for instance, is a gin brand that follows a “farm to bottle” philosophy. It is made from ingredients found in the Kumaon region of Uttarakhand. NeuWorld Spirits produces two premium whisky brands that quickly grabbed 4-6% market share in their respective price categories. The homegrown Piccadilly Industries entered the lucrative single-malt whisky segment, producing spirits that meet EU and Scottish standards. Its single malt brand Indri has earned several international recognitions. Other notable Indian single malt brands include Amrut, Rampur, Paul John, etc. Indian single malts quickly outsold established foreign brands, holding 52% of segment sales in India in 2023. Apart from startups and artisanal brewers, India is also home to global alcohol giants like Diageo and Pernod Ricard, both of which also have reputed single malt brands as well.
As the profile of Indian brands continues to rise, the export performance has become much more promising as well. During the financial year 2022-23, Indian brands exported spirits like rum, whisky, brandy, gin and vodka valued at around $184 million. Beer exports from India during this period grossed $31.45 million, while wine brands earned $3.79 million.
In recent years, Indian brands have amassed rave reviews in international podiums. Indian liquor companies have earned appreciation for their outstanding quality, craft, and innovation. This has further enhanced their reputation on the global stage. Radico Khaitan’s Jaisalmer Gin was awarded a gold medal in the 2021 International Spirits Challenge, while Amrut Distilleries’s Amrut Fusion clinched double gold in the 2023 Whiskys of the World Award. Last year, Piccadily’s single malt Indri was awarded a gold medal in the Tokyo Whisky & Spirits Competition.
With growing market presence and recognition, the Indian alcohol and liquor industry is also emerging as a strong investment alternative in the equity market. Given the number of companies operating in this industry, Investors have quite a few options to choose from, from well-known stalwarts to up-and-coming ventures. This includes established players like Radico Khaitan, United Spirits and United Breweries, each of whom have Rs 11 to Rs 15 in earnings per share. Country liquor and IMFL manufacturer GM Breweries has posted strong EPS recently, followed by Globus Spirits which manufactures value and premium liquors, as well as other distillery products. Sula Vineyards has a strong market presence in the wine market, while Tilaknagar Industries is a good performer with a presence in the brandy, rum, gin and whisky market.
Given its growth and promise, the Indian liquor industry is expected to keep our spirits high!
BUY NOW
