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Spurt in social gatherings after Covid boosts alcohol sales in India

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  • The Indian alcoholic beverages market is expected to grow at 11% per annum in terms of value for the period between 2021 and 2025.
  • the alcohol and beverage industry in India is expected to exceed the volume of 1200 million cases by 2025.
  • The alcoholic beverage industry in India faces various obstacles – from tourists triggering pandemic fears to varying excise taxes across the country.
  • Consumers are also switching from beer to whiskey, rum, brandy and whiskey due to budget and health concerns.

A growing spurt in social gatherings and socializing after the pandemic is fueling an increase in food and beverage consumption, driving the alcohol sales in india. Consumers are also switching from beer to brown liqueurs such as whiskey, rum, brandy and scotch due to budget and health concerns, industry experts say.

“There has been retaliation in the market for the past six months. Many have switched from beer to products with a higher alcohol content. Beer is relatively more expensive because people buy more of it because of its lower alcohol content,” said Ishwaraj Bhatia, COO of the craft beer company. Simbawhich witnessed a 35% growth after the pandemic.

Indians have taken to the streets en masse to socialize in restaurants, clubs, pubs and bars – to make up for all lost social interactions after the forced isolation of the Covid-19 pandemic.

Bangalore-based Ironhill, which claims to be the world’s largest microbrewery, achieved total sales of over ₹150 crore in 2022 alone.

“The post-pandemic era has been promising for us in many ways. Our sales have improved due to steady visitor numbers in all our points of sale. Consumption was highest by a huge margin in Bengaluru, followed by Vijayawada in Andhra Pradesh and outlets in Telangana and Andhra Pradesh,” said Teja ChekuriManaging Partner of Ironhill India.

Dine-in business of quick-service restaurants or QSRs experienced strong growth in Q1FY2023 according to a BNP Paribas sector report. That promises something alcohol use at.

According to a 2022 Mirae Asset QSR report, pubs, clubs and bars make up 27% of the sales share. Pubs and bars are expected to grow at a CAGR of 14.8% and 9.5% in FY25, Paribas said.

The Indian alcoholic beverages market is the third largest market in the world by volume, after China and the US. This market is expected to grow at 11% per year in terms of value in 2021-2025, while volume is expected to exceed 1200 million cases by
2025.

Excise change a challenge

Even as India’s alcoholic beverage industry is slowly back on the road to recovery, it faces a variety of hurdles – from tourists triggering pandemic fears to varying excise taxes across the country.

Delhi, a major alcoholic beverage market, has recently changed its excise policy. From September 1, Delhi and Ghaziabad went back to their old excise policies, leaving private players in the lurch. Private players offered one plus one free alcohol to sell the remaining stock before the old excise policy came back.

“The old excise policy favored the private players more than the government sellers. Label and registration costs have increased 100 times and marketing is limited. To register a label in Delhi we have to pay ₹15 lakh per year. Delhi has been very expensive for us from the start,” says Simba’s Bhatia.

The industry entrepreneurs say Tier 1 cities were facing the trouble of getting back on track due to the high influx of travelers following the pandemic that led to Covid cases. The tier 2 and tier 3 cities were faster to customize.

“It is more difficult to sell alcohol in India than abroad because each state is a different country with its own excise rules. We have a separate team to monitor the rapid changes in excise rules in various states in India. The southern region of India is especially difficult to tap into, as it accounts for 40% of beer sales,” says Bhatia.

Despite these problems, the Indian alcoholic beverage industry expects to grow strongly in the coming years and is looking to expand.

British research agency IWSR drinks market analysis says Indian spirits segments will grow 4.4% over the next five years, while beer will grow 9.3%.

“We have been pushing our franchise model quite aggressively and have already started talks for outlets in Maharashtra, Delhi, Punjab, Rajasthan, among others. We plan to have at least 30 outlets across India in the coming years,” said Chekuri of Ironhill India.

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